An
organization is a social
arrangement which pursues collective
goals, controls its own performance,
and has a boundary separating it from
its environment.
An objective is something you want to achieve. As a
learner of IMK-ICM Poojappura, you may have many
objectives in mind; one could be to perform well in the
examination. Similarly, business objectives are
something which a business organization wants to
achieve or accomplish over a specified period of time.
These may be to earn profit for its growth and
development, to provide quality goods to its
customers, to protect the environment etc. These are
the objectives of business. In the following section let
us classify the objectives of business.
Survival – a short term objective, probably for small business just
starting out, or when a new firm enters the market or at a time of
crisis.
Profit maximization – try to make the most profit possible – most
like to be the aim of the owners and shareholders.
Profit satisfying – try to make enough profit to keep the owners
comfortable – probably the aim of smaller businesses whose
owners do not want to work longer hours.
Sales growth – where the business tries to make as many sales as
possible. This may be because the managers believe that the
survival of the business depends on being large. Large businesses
can also benefit from economies of scale.
- To break even (cover costs)
- To improve its image
- To have high motivation amongst employees
- To grow in size (e.g. sales, number of
customers, number of employees
- To Sell abroad
- To diversify and sell different products
- To make returns to shareholders if a limited
company (dividends)
Ethical and socially responsible objectives – organizations like the Co-
op or the Body Shop have objectives which are based on their beliefs on
how one should treat the environment and people who are less fortunate.
Public sector corporations are run to not only generate a profit but
provide a service to the public. This service will need to meet the needs of
the less well off in society or help improve the ability of the economy to
function: e.g. cheap and accessible transport service.
Public sector organizations that monitor or control private sector
activities have objectives that are to ensure that the business they are
monitoring comply with the laws laid down.
Health care and education establishments – their objectives are to
provide a service – most private schools for instance have charitable
status. Their aim is the enhancement of their pupils through education.
Charities and voluntary organizations – their aims and objectives are led
by the beliefs they stand for.
1. Framing rules, policies and procedures.
2. Helps in ascertaining the resource requirement.
[Link] direction to the activities.
4.A set of well defined objectives enable a firm to
assign duties to the employees
[Link] the basic for measuring and
evaluating
employee performance
Profit making
Satisfaction of wants
Risk taking
Dealing in goods and services
Continuous activity
Innovative and dynamic in nature
Subsystem of the society
Occupation
Legal control
Objectives give the business a clearly defined
target. Plans can then be made to achieve these
targets. This can motivate the employees. It
also enables the business to measure the
progress towards to its stated aims.
S – Specific – objectives are aimed at what the business does, e.g.
a hotel might have an objective of filling 60% of its beds a night
during October, an objective specific to that business.
M - Measurable – the business can put a value to the objective,
e.g. €10,000 in sales in the next half year of trading.
A - Agreed by all those concerned in trying to achieve the
objective.
R - Realistic – the objective should be challenging, but it should
also be able to be achieved by the resources available.
T- Time specific – they have a time limit of when the objective
should be achieved, e.g. by the end of the year.
A business may change its objectives over time due to
the following reasons:
A business may achieve an objective and will need to
move onto another one (e.g. survival in the first year
may lead to an objective of increasing profit in the
second year).
The competitive environment might change, with the
launch of new products from competitors.
Technology might change product designs, so sales
and production targets might need to change.
The preparation of a written business objective
is not the end-result of the planning process.
The realization of that plan is the ultimate
goal. However, the writing of the plan is an
important intermediate stage - fail to plan can
mean plan to fail. For an established business it
demonstrates that careful consideration has
been given to the business's development, and
for a startup it shows that the entrepreneur has
done his or her homework.
