Need for Business Objectives and the
Importance of Them
Business objectives are the set of targets or milestones that are expected to achieve by the business managers while working in an organization. The business objectives are important to set as these are the main reason behind the success of an organization.
Why Business Objectives are Important to Set
There are various advantages to set business objectives:
• The objectives of the business set the direction for the whole organization to work
• The focus of the decisions becomes the achievements of the objectives
• The objectives provide the targets to the managers and workers to achieve that motivates them
• Business managers can measure the performance of their team members that how much objectives they have achieved and what objectives are remaining
What Objectives Does the Business Set?
There are various business objectives that are set according to the nature of the business. A newly set business at initial times may have an objective of development and earning profit only while an established business may set objective to serve the community.
Whenever any new business is set up, the first question arises on its survival. Survival is an important objective of business when it is newly set up. Sometimes when a recession hits an economy, survival becomes important for those businesses that are offering their services for many years. If survival becomes a question for a firm, the business managers then decide to reduce the prices to make their position safe in the market.
Profit is the ultimate aim of the business if it is operated in the private sector. If any business like railway is running in the government sector, the aim of it may be to earn less profit and to provide more facilities to the public. In the private sector, it is not possible for any business to survive without earning profit. Private business owners want to earn maximum profit. Tax is a tactic to stop the profit at some level as an increase in income also increases the tax on it.
Returns to Shareholders
Shareholders are the owners of limited companies. The managers of these companies try their best to increase profit as increased profit per share will ultimately benefit the owners of the limited companies. This may help the managers to save their jobs in the company. Another way to increase the return to shareholders is to increase the share price which leads to the growth and the higher profits.
Growth of the Business
All the owners and managers want to grow their businesses that could be measured by the value of sales or output. With the growth of a business, the job of a manager becomes more secure. There is more chance to increase the salaries and other benefits for staff. Growth is also necessary for a business to get a higher market share.
The growth of a business is directly proportional to customer satisfaction. If a customer is satisfied, it is easy to grow the business but if the customer is not satisfied with your product or services, it is impossible to grow the business so always keep your customers’ needs on priority.
The market share can be calculated by a simple formula which is given below:
Market Share = (Company Sales / Total Market Sales) * 100
Now we can consider an example of a company A that has sales of $20million while the total market volume is $100million then the share of company A will be 20% of total market share. There are various advantages to more market share. A company may claim to be the most popular brand if it has more market share. There will be a strong position for the company while dealing with the suppliers etc.
What are the Objectives of a
Social enterprises are those enterprises that have other objectives beyond the financial objectives to serve the society. These enterprises are also owned by private individuals. Some of the objectives of social enterprises are discussed below:
Environmental objectives: Social enterprises work to protect the environment. To achieve this objective, they start awareness campaigns like to encourage the recycle papers, etc.
Sometimes social enterprises work for the benefits of less privileged areas of the society. For example, some social enterprises try to provide quality education at an affordable price for poor in less privileged areas. This practice is common in underdeveloped countries. Sometimes some social enterprises work to provide the job for disabled people.
The main financial objective of a social enterprise is to earn profit to reinvest in the business. They reinvest profit in the business to expand their social work to the next level as compared to the current working level.