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  1. enterprise as
    6 主题
  2. business-structure as
    6 主题
  3. size-of-business as
    3 主题
  4. business-objectives as
    3 主题
  5. stakeholders-in-a-business as
    2 主题
  6. human-resource-management as
    8 主题
  7. motivation as
    4 主题
  8. management as
    2 主题
  9. the-nature-of-marketing as
    7 主题
  10. market-research as
    3 主题
  11. the-marketing-mix as
    6 主题
  12. the-nature-of-operations as
    3 主题
  13. inventory-management as
    2 主题
  14. capacity-utilisation-and-outsourcing as
    1 主题
  15. business-finance as
    2 主题
  16. sources-of-finance as
    3 主题
  17. forecasting-and-managing-cash-flows as
    1 主题
  18. costs as
    4 主题
  19. budgets as
    1 主题
  1. Business AS CIE
  2. business-objectives as
  3. business-objectives mission-aims-objectives-strategy-and-tactics
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Exam code:9609

The role of objectives in business decision making

  • Objectives provide a sense of direction and focus to those running and making decisions within a business

    • Objectives act as targets

      • Decisions that contribute to achieving these targets can be pursued, whilst those that make little contribution can be discarded

      • Poor decisions that fail to achieve objectives can be avoided in future and may inform management training

    • Objectives allow success criteria to be determined and outcomes to be measured

      • Suitable strategies that have the greatest chances of success can be implemented

      • Inappropriate or risky strategies may be avoided

The hierarchy of aims, mission and objectives

  • A business’s aim is its long-term direction, which is usually broadly stated and often aspirational

    • It is usually set by senior executives

    • E.g. To be the most successful independent coffee shop chain in the country

  • Some businesses express their aim in a mission statement

    • Mission statements usually include words or attractive phrases that appeal to key stakeholders

    • E.g. Bring the World of Coffee to Every Neighbourhood

  • Business objectives are derived from the aim and mission

    • Objectives state, specifically and in measurable terms, what the business wants to achieve

    • E.g. Increase sales of coffee by 25% in 2024

      • Corporate objectives are whole-business targets

      • Functional objectives are derived from corporate objectives and describe the targets of business departments or functional areas

  • The link between a business’s aim, mission and objectives can be illustrated as a hierarchy

The hierarchy of aims, mission and objectives

Triangle hierarchy of business goals: Aim at top, followed by Mission, Corporate objectives, and Functional objectives at the base.
The business aim informs its mission, corporate objectives and functional objectives

SMART Objectives

  • The most effective objectives are clearly stated and allow progress to be assessed

  • These types of objectives can be summarised using the acronym SMART

    • Specific: what exactly the business is measuring, such as the value of sales or sales volume

    • Measurable: a quantifiable success measure, such as a percentage increase

    • Agreed; the objective is shared with workers and perhaps mutually agreed

    • Realistic: Ambitious, but capable of being achieved in normal circumstances

    • Time-bound: a date or time by which the objective should be achieved

Example of a SMART Objective

Text reads, "Increase the volume of annual subscription renewals by 12% during Q3 2023" on a beige background.
This objective is specific, measurable and time-bound

Strategy and tactics

  • A business strategy is a long-term approach a business adopts to achieve its key objectives

    • E.g., A business pursuing an objective of growth may choose to adopt a strategy of diversification, targeting new customers with innovative products

  • Tactics are the short-term actions a business takes as part of its overall strategy

    • A business pursuing a strategy of diversification may choose to adopt the tactic of conducting research in the target market before establishing sales outlets in a new location

Objectives, strategy and tactics

Flowchart with three sections: "Objective" shows "Achieve sales growth of 20% in 2024", "Strategy" shows "Diversification", "Tactics" show "Conduct market research, Open sales outlets".
Businesses decide on a suitable strategy to achieve their objectives, which informs short-term tactics

Strategy, tactics and budgets

  • Once tactics have been determined, managers can set targets and allocate budgets to teams and individuals

  • Adhering to budgets and meeting these targets contribute to achieving the overall business objectives

    • Careful monitoring and adjustment, taking account of the external environment, is crucial

      • Budgets may need to be increased or more tightly controlled

      • If targets change, their impact on the likelihood of achieving objectives will need to be considered

      • Further resources may be required to meet deadlines or achieve budgetary targets

Examiner Tips and Tricks

This topic area contains a large number of key terms that you could be asked to define or explain in an exam.

Whilst ‘define’ questions simply ask for the meaning of a key term, you need to remember that ‘explain’ questions will need some reference to the business scenario you are given.

How objectives change over time

  • Businesses operate in a dynamic environment, which may require them to pivot between different objectives

  • These changes are often necessary to ensure that the business remains competitive, profitable, and compliant with regulations 

Factors that cause business objectives to change over time

Factor

Explanation

Example

Market conditions

  • Market conditions such as competition, demand, and changing consumer price sensitivity can have a significant impact on a business’s aims and objectives

  • Uber and Lyft were initially focused on capturing the largest share of the ride-hailing market (market share)

  • As competition intensified, both companies shifted their focus to profitability, and their objectives changed accordingly (profit maximisation)

Technology

  • A business may shift its focus from traditional brick-and-mortar retail to online retail as technology allows for a more cost-effective way to reach customers

  • Amazon began as an online bookstore, but as technology advanced, it expanded into a wide range of retail categories such as electronics, clothing and groceries

  • Their objective changed from increasing market share to market development

Performance

  • If a business is not meeting its sales goals in one area, it may change its objectives to try an improve its financial performance

  • In some cases, this may involve retrenchment (moving out of existing markets)

  • In 2018 Ford announced that it was shifting its focus away from producing passenger cars and focusing more on SUVs and trucks

  • The move was driven by the company’s poor financial performance and the new objectives were aimed at improving sales and profitability

Legislation

  • A company may need to shift its focus to comply with new regulations or capitalise on new opportunities created by changes in legislation

  • With the passage of the Affordable Care Act in the USA in 2014, healthcare providers had to adjust their aims and objectives to comply with new regulations and take advantage of new opportunities created by the law

Ethics and social change

  • Over time, attitudes towards social issues and what is considered to be right and wrong develop, forcing a business to change its objectives

  • Until the 1950s, tobacco companies’ marketing objectives included promoting health-giving effects of smoking and increasing sales to young people

  • By 2023, British American Tobacco (BAT) had changed its sales objective ‘To have 50 million consumers of our non-combustible products by 2030’

Internal reasons

  • Factors such as changes in management or the company culture can also influence a business’s aims and objectives

  • Innovation or advances in processes might mean that more ambitious objectives may be set

  • In 2014, Microsoft appointed Satya Nadella as the company’s CEO

    • He shifted the company’s focus from software to cloud services and the company’s objectives changed accordingly

Communicating the business objectives

  • Communicating the business objectives effectively, helps to ensure that employees are all working towards the same purposes

    • A range of other stakeholders benefit from this too

  • Businesses share objectives with key stakeholders in a range of ways 

  • Public limited companies publish an annual report that shows a company’s operations and financial performance in the preceding 12 months and details the objectives it expects to achieve over the next twelve months

    • Shareholders and potential investors can use this information to determine the likely return on investment they will receive

  • Businesses often share their mission statement in marketing materials such as brochures or via their websites

    • Customers, employees and the local community are often interested in understanding the broad aim of a business in which they have an interest

  • Objectives are also commonly shared with employees in business meetings and, particularly, during the <span class=”popovers” data-content=”Annual review of an employee’s job performance and overall contri

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