Chapter 5 - Business Objectives and Stakeholder Objectives
Learning Objectives: To understand the various business objectives
Plans, plans, plans...
Businesses have short, medium, and long-term plans which is how the business will achieve its objectives.
Plans are detailed lists of resources and actions to achieve objectives.
When businesses are tracing their objectives a rule of thumb is to use the acronym SMART:
Let's look at the example of a potential objective for an airline business:
SMART:
Specific: number of seats occupancy on an airplane
Measurable: 85% seat occupancy
Achievable: discussed with appropriate departments to see if it’s possible and what needs to be done for it to be possible;
Realistic: and Relevant: Is it possible to achieve and relevant to the business success?;
Time-specific: Within the next 12 months.
Different businesses have different objectives - here are some of the most common ones:
Survival:
The biggest first challenge of a business is stay in business (new businesses or industries going through tough times);
Another common use of survival as an objective is during economic recessions or moments of high competition.
Growth:
It can be measured by both sales and value of output and lead to several benefits:
Firms are less prone to takeovers;
Employees motivation (bigger firm represents bigger opportunities and better benefits);
Keeps investors engaged (as growth is one of their main objectives);
Costs become lower as the business grows.
Profit
Another common objective for businesses: to lower costs and increase revenues to the highest possible level.
Market Share:
Market share refers to the portion or percentage of a market owned by a company or an organization.
Let's look at some examples of market share:
Finally, CSR is another common business objective businesses nowadays have:
CSR as an objective means:
Businesses taking on socially, ethically, and environmentally responsible decisions.
It also means that businesses worry about other things (customers, workers, suppliers) rather than just profit.
Many businesses have CSR as an objective because if they don't:
It may lead them to create bad publicity and losing their brand reputation;
As a consequence, there might be a decrease in sales revenues and therefore profits;
There are a few reasons why CSR is becoming increasingly important:
Pressure groups;
Media focus on social, ethical, and environmental impact of businesses;
Trade unions acts for better working conditions;
More strict laws towards ethical, social, and environmental decisions.
To-Do-List:
Activity 5.2 (p. 60)
Chapter 5 - Business Objectives and Stakeholder Objectives
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