gcse economics - firms - introduction & business objectives
An objective is a target that a business sets itself. The target may be short term (one year) or long term (five years). It is important that the targets are regularly reviewed, this helps the business to measure its progress..
EXAMPLES
- To survive in the market
- To break even (cover costs)
- To improve its image
- To have high motivation amongst employees
- To maximise profits
- To increase market share
- To grow in size (e.g. saales, number of customers, number of employees
- To Sell abroad
- To diversify and sell different products
- To make returns to shareholders if a limited company (dividends)
Effective Business Objectives:
Objectives need to be SMART eg increase Sony wants to achieve a market share for PlayStation2 of 55% within two years of launch. SMART stands for:
- Specific: ie one named person is responsible for delivering the objective
- Measurable: ie set in terms of a number value eg sales, market share
etc
- Achievable: ie the target can be met
- Realistic: the target must be achievable in terms of financial and human
resources available.
- Timed: ie within a given period of time eg 12 months
ACTION
a. How do the examples change as you work through the list?
b. What would be the objectives for
a) a new small sandwich shop
b) an established sandwich shop
c) Virgin?
c. Why do you think that they are different?
d. How may the objectives differ for a sole trader and a public limited company?
SMART
THINKING
e. Why might there sometimes be a conflict in objectives e.g. between shareholders, employees and managers?
These GCSE Economics revision notes have been kindly provided by Peter Davies of Mill Hill School, Ripley Keep Up-todate with your GCSE Economics - Subscribe Free to Economics in the News by Email
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