Foundation Apprenticeship in Business Skills Business Objectives Today
Foundation Apprenticeship in Business Skills Business Objectives
Today we will… • Discuss the objectives of different types of business organisations • Justify why businesses have these objectives
Mission Statements Explains what the organisation is in business to do and what it wants to achieve. Starbucks – ‘to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time. ’ The Body Shop plc – ‘To dedicate our business to the pursuit of social and environmental change. ’
Mission Statements • Mission statements may include - The number one priority for the organisation - Product definitions - Non-financial objectives - Overall values and beliefs The mission statement determines the business objectives
Objectives are long term goals which businesses aim to achieve and can be used to measure success Objectives allow employees, customers and suppliers to know what the business is working towards
Effective Organisational Objectives Must be SMART Specific – detail what needs to be achieved Measurable – success should be measured Achievable – within the capability of the organisation Realistic Timebound - should have a deadline
Business Objectives Profit Maximisation Corporate Social Responsibility Survival (Break Even) Growth (Increase Market Share) Satisficing Managerial Objectives
Private Sector The Private Sector aims: To maximise profits To expand the business Survive (break even) Improve quality of goods and services
Public Sector The Public Sector aims: To provide the highest quality of service to everyone in a country To make good use of taxpayers’ money when providing the services an area needs
Fife Council – Enterprise and Environment Key objective: To create a comprehensive service to provide new and refurbished buildings and facilities management and maintenance arrangements for the Council’s assets. To drive commercial benefit from some of the more commercial aspects of the Council’s infrastructure. And to provide a fully integrated service for the management and maintenance of the roads, footpaths and cycle networks. We also look after a quality refuse collection service for domestic and commercial customers and are responsible for the provision and maintenance of the Council’s vehicle fleet.
Third Sector The Third Sector aim: To provide support for worthy causes, like homelessness, medicine, disability etc To raise awareness of good causes To provide the best service possible
Provide a Quality Service All organisations aim to provide a quality service to their customers or members. • Private sector businesses aim to do this to encourage customers to return and to gain a good reputation and attract new customers • Public sector organisations do this to satisfy the needs of the community and improve the standards of living in their area, such as a school offering a quality education • Third sector organisations want to provide a quality service to aid those individuals or groups they aim to help
Profit Maximisation Making a profit means bringing in more money than they spend on purchasing materials and other expenses. As a business grows it will aim to make as much profit as possible. There are 2 ways to maximise profit: • Increase selling price • Reduce your costs – eg public limited companies may expand overseas where the cost of labour and resources is cheaper than in their home country
Survival Businesses exist to make a profit, but for some, simply surviving is more important – this means they continue to trade. This is often the situation for business start ups/small businesses. Economic downturn cause many businesses to fail!
Growth Why do businesses grow?
Increase Market Share Market share is the percentage of total sales in a market that a business has. The business that has the most sales in a market is known as the market leader. Businesses aim to improve their products and services to ensure that existing customers return and to try to entice their rivals’ customers to their business.
Sales Maximisation The objective of sales maximisation can arise due to management aiming to achieve personal goals rather than the aims of the business. For example, to maximise sales could mean dropping the selling price of a product; managers, salespeople and even entire branches who are on commission for the number of sales made, will be less interested in the overall profits of the business and more interested in selling as many units as possible.
Corporate Social Responsibility Corporate social responsibility (CSR) refers to organisations aiming to act in an ethical way or in any way that benefits either society or the environment. Ethical & environmental responsibilities eg not using child labour or sweat shops Philanthropy eg donating to charity Economical responsibilities eg using fair and competitive marketing Legal responsibilities eg following laws that govern businesses
Corporate Social Responsibility Being responsible in business is very important Businesses that are seen to be irresponsible tend to gain a bad reputation and can suffer from decreased sales as a result The Body Shop does not test on animals M&S sell a number of fair trade products Mc. Donalds place bins outside their restaurants Car manufacturing companies are now trying to reduce their fuel emissions
Satisficing § Phrase coined by Herbert Simon in 1956 § To ‘satisfy’: to aim for a satisfactory result, rather than an exceptional one § NHS is a good example – they will aim to stay within budget, not to make drastic cuts
Managerial Objectives § Large organisations = many managers § Some managers may chose to pursue their own aims § This might be to increase their own salary or promotion opportunities § Businesses can benefit if the manager increases sales/profit
Customer Satisfaction Customer satisfaction is vital for the success of any business. If customers are happy with the business and feel that they have been treated well they will come back again and loyalty can be built up. They won’t complain or give the business a bad reputation and they will be reluctant to go elsewhere even if they can pay less.
Enterprise All businesses will have enterprise as an objective in order to keep their business moving forward and continuing to be successful. It may mean coming up with new products, improvements to existing products, better ways of producing or selling products to improve customer satisfaction, lower costs or better quality. This will give them an advantage over their competitors, which will improve profits, market share and ensure the long -term survival of the business.
Social Enterprises do not aim to make profit, however they are not charities! They have social aims and objectives. Any surplus made is either reinvested to support the business or used to help the local community.
Social Enterprise in Fife Furniture Plus Ltd • Furniture reuse and recycling organisation • Alleviate furniture poverty Funky Science • Delivers science workshops to schools and early years establishments • Encourage young people to engage with science education - linked to STEM
Conflicting Objectives • Growth v Profit • Growth v Customer Service • Survival v Profit
- Slides: 26