Business Aims And Objectives aqa

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Exam code:8132

What are business aims and objectives?

Business aims are the long-term goals or aspirations of an organisation
Business objectives are the specific, measurable outcomes that businesses hope to achieve in a given time period
Every successful business needs to have clear aims and objectives that guide its operations and focus the efforts of all employees towards the same goal
- Aims and objectives are critical for businesses to function effectively and achieve long-term success
- E.g. A business’s aim may be to become the market leader in a particular industry
  - Suitable objectives may include increasing sales by 25% over the next three years, improving customer satisfaction by 15%, and expanding into new geographic markets

The link between aims and objectives

Flowchart showing aim as "Global Market Leader in Electric Vehicles" with objectives "Increase market share in Europe by 20% in 2023" and "Increase revenue in the US market by $50M in 2013". — **Business objectives are derived from the overall business aim**

Objectives are most useful when they are SMART
- Specific: it states precisely what is to be achieved
- Measurable: the desired outcome is expressed in quantitative terms
- Achievable: it is possible with the people and resources involved
- Realistic: it is possible within the set timeframe
- Time specific: the timeframe or date by which the objective is to be achieved is clear
An example of a SMART objective might be for a business to increase its sales revenue by 10% by the end of the year

The role of business aims and objectives

Aims and objectives allow managers to determine and communicate exactly what they want the business to achieve
- Managers can set targets and goals for employees and workplace teams
  - Aims and objectives can act as motivators, as workers can understand the contribution of their hard work to business success
  - Employees may receive a financial reward for their progress towards meeting objectives
- Investors and other interested stakeholders can understand the direction the business is choosing to pursue
  - This can help them decide whether to align themselves with the business
- Priorities can be determined when making business decisions
  - Decisions that have a direct impact on the achievement of aims and objectives can be considered before others

The main business objectives

Many businesses pursue one or more of a range of common business objectives
- Many of these are financially-focused
  - Aims and objectives are centred on increasing revenue or profit, reducing costs, maximising shareholder value or ensuring survival
- Businesses may also pursue non-financial aims and objectives
  - These may include fulfilling personal ambitions, making a positive contribution to society or improving employee welfare

Examples of common business objectives

Objective	Explanation
Survival	A common objective in the early stages of trading 60% of UK start-ups fail within their first three years Common reasons for failure include poor cashflow, low sales and unexpected costs It will involve minimising costs and taking steps to grow sales quickly, at a low price if necessary
Growth	Businesses often achieve growth by increasing sales Persuading customers to buy products more often or in greater quantities to increase sales revenue and expand the business Appealing to new market segments creates opportunities to sell to customers who may not have been previously aware of the business and its brands
Profit	Ensuring sales revenue received is greater than business costs This allows for financial security as a business and its owners can pay all the overheads and have some in reserve to pay for unexpected emergencies
Market share	This is the percentage of the total market revenue that a single business or brand achieves Costa had an 8% market share of ‘out-of-home’ coffee consumption in the UK in 2020 If market share is increasing, it means that the firm is competing effectively with rivals
Shareholder value	A common objective for public limited companies is to increase share price and dividends payable to shareholders Having this objective helps attract new investors and satisfy existing shareholders
Customer satisfaction	A business may aim to achieve customer satisfaction by delivering high-quality products, providing excellent customer service and offering attractive pricing E.g. Wagamama restaurants aim to achieve customer satisfaction by offering a welcoming atmosphere, friendly service and delicious food
Social and ethical objectives	Social objectives emphasise a business’s commitment to addressing social or environmental issues E.g. Superdry aims to reduce its environmental impact by using sustainable materials and minimising waste, while treating its workers fairly and supporting the communities where it operates
Financial security	Business owners may simply want to earn a living from the risk and effort they put in Satisficing may be enough for a business owner to pursue their chosen lifestyle E,g, During the summer months, Lesley Mann runs her small eco guesthouse in St Ives, Cornwall and chooses to spend each winter working with animal charities in Turkey

Examiner Tips and Tricks

In the exam, you could be asked to identify common business objectives. The question may ask specifically for financial or non-financial objectives. Make sure that your answer is specific to this question stem.

Business GCSE AQA