Commerce Exam > Commerce Questions > What are the objective of a business?
Start Learning for Free
What are the objective of a business?
Verified Answer
What are the objective of a business?
Business Objectives
Objectives give the business a clearly defined target. Plans can then be made to achieve these targets. This can motivate the employees. It also enables the business to measure the progress towards to its stated aims.
The most effective business objectives meet the following criteria:
S – Specific – objectives are aimed at what the business does, e.g. a hotel might have an objective of filling 60% of its beds a night during October, an objective specific to that business.
M - Measurable – the business can put a value to the objective, e.g. €10,000 in sales in the next half year of trading.
A - Agreed by all those concerned in trying to achieve the objective.
R - Realistic – the objective should be challenging, but it should also be able to be achieved by the resources available.
T- Time specific – they have a time limit of when the objective should be achieved, e.g. by the end of the year.
The main objectives that a business might have are:
Survival – a short term objective, probably for small business just starting out, or when a new firm enters the market or at a time of crisis.
Profit maximisation – try to make the most profit possible – most like to be the aim of the owners and shareholders.
Profit satisficing – try to make enough profit to keep the owners comfortable – probably the aim of smaller businesses whose owners do not want to work longer hours.
Sales growth – where the business tries to make as many sales as possible. This may be because the managers believe that the survival of the business depends on being large. Large businesses can also benefit from economies of scale.
A business may find that some of their objectives conflict with one and other:
Growth versus profit: for example, achieving higher sales in the short term (e.g. by cutting prices) will reduce short-term profit.
Short-term versus long-term: for example, a business may decide to accept lower cash flows in the short-term whilst it invests heavily in new products or plant and equipment.
Large investors in the Stock Exchange are often accused of looking too much at short-term objectives and company performance rather than investing in a business for the long-term.
Alternative Aims and Objectives
Not all businesses seek profit or growth. Some organisations have alternative objectives.
Examples of other objectives:
Ethical and socially responsible objectives – organisations like the Co-op or the Body Shop have objectives which are based on their beliefs on how one should treat the environment and people who are less fortunate.
Public sector corporations are run to not only generate a profit but provide a service to the public. This service will need to meet the needs of the less well off in society or help improve the ability of the economy to function: e.g. cheap and accessible transport service.
Public sector organisations that monitor or control private sector activities have objectives that are to ensure that the business they are monitoring comply with the laws laid down.
Health care and education establishments – their objectives are to provide a service – most private schools for instance have charitable status. Their aim is the enhancement of their pupils through education.
Charities and voluntary organisations – their aims and objectives are led by the beliefs they stand for.
Changing Objectives
A business may change its objectives over time due to the following reasons:
A business may achieve an objective and will need to move onto another one (e.g. survival in the first year may lead to an objective of increasing profit in the second year).
The competitive environment might change, with the launch of new products from competitors.
Technology might change product designs, so sales and production targets might need to change.
This question is part of UPSC exam. View all Commerce courses
Most Upvoted Answer
What are the objective of a business?
Profitability. ...Productivity. ...Customer Service. ...Employee Retention. ...Core Values. ...Growth. ...Maintain Financing. ...Change Management.
Community Answer
What are the objective of a business?
Objective of a Business:
The objectives of a business refer to the specific goals and targets a company aims to achieve within a given period. These objectives guide and shape the actions and decisions of the business, providing a clear direction for its operations. The objectives of a business can be broadly classified into two categories: financial objectives and non-financial objectives.
Financial Objectives:
Financial objectives primarily focus on the financial performance and profitability of a business. These objectives are crucial as they directly impact the sustainability and growth of the company. Some key financial objectives include:
1. Profit Maximization: One of the primary objectives of a business is to maximize profits. Generating a surplus of revenue over costs is essential for the survival and expansion of a company.
2. Revenue Growth: Businesses strive to increase their revenue by attracting more customers, expanding market share, or introducing new products or services.
3. Cost Control: Reducing costs and improving operational efficiency is a common financial objective. By optimizing resources and minimizing expenses, businesses can enhance profitability.
4. Return on Investment (ROI): Achieving a satisfactory return on investment is crucial for businesses, as it indicates the profitability of the capital employed.
Non-Financial Objectives:
Non-financial objectives focus on the broader impact and sustainability of a business beyond financial performance. These objectives encompass various aspects of the company's operations and its relationships with stakeholders. Some non-financial objectives include:
1. Customer Satisfaction: Businesses aim to provide excellent products or services that meet or exceed customer expectations. Satisfied customers lead to repeat business, positive word-of-mouth, and increased brand loyalty.
2. Employee Satisfaction and Development: Fostering a positive work environment, providing growth opportunities, and recognizing employee contributions are crucial non-financial objectives. Satisfied and motivated employees contribute to productivity and innovation.
3. Corporate Social Responsibility (CSR): Many businesses adopt CSR initiatives to contribute positively to society and the environment. These objectives may include sustainable practices, ethical sourcing, community involvement, or philanthropy.
4. Market Leadership: Becoming a market leader or maintaining a strong market position is a common non-financial objective. This objective often involves strategies such as innovation, differentiation, or superior customer service.
In conclusion, the objectives of a business encompass both financial and non-financial aspects. While financial objectives focus on profitability and financial performance, non-financial objectives emphasize factors like customer satisfaction, employee well-being, and social responsibility. These objectives guide the decision-making process and shape the overall strategy of a business, ensuring its long-term success and sustainability.
The objectives of a business refer to the specific goals and targets a company aims to achieve within a given period. These objectives guide and shape the actions and decisions of the business, providing a clear direction for its operations. The objectives of a business can be broadly classified into two categories: financial objectives and non-financial objectives.
Financial Objectives:
Financial objectives primarily focus on the financial performance and profitability of a business. These objectives are crucial as they directly impact the sustainability and growth of the company. Some key financial objectives include:
1. Profit Maximization: One of the primary objectives of a business is to maximize profits. Generating a surplus of revenue over costs is essential for the survival and expansion of a company.
2. Revenue Growth: Businesses strive to increase their revenue by attracting more customers, expanding market share, or introducing new products or services.
3. Cost Control: Reducing costs and improving operational efficiency is a common financial objective. By optimizing resources and minimizing expenses, businesses can enhance profitability.
4. Return on Investment (ROI): Achieving a satisfactory return on investment is crucial for businesses, as it indicates the profitability of the capital employed.
Non-Financial Objectives:
Non-financial objectives focus on the broader impact and sustainability of a business beyond financial performance. These objectives encompass various aspects of the company's operations and its relationships with stakeholders. Some non-financial objectives include:
1. Customer Satisfaction: Businesses aim to provide excellent products or services that meet or exceed customer expectations. Satisfied customers lead to repeat business, positive word-of-mouth, and increased brand loyalty.
2. Employee Satisfaction and Development: Fostering a positive work environment, providing growth opportunities, and recognizing employee contributions are crucial non-financial objectives. Satisfied and motivated employees contribute to productivity and innovation.
3. Corporate Social Responsibility (CSR): Many businesses adopt CSR initiatives to contribute positively to society and the environment. These objectives may include sustainable practices, ethical sourcing, community involvement, or philanthropy.
4. Market Leadership: Becoming a market leader or maintaining a strong market position is a common non-financial objective. This objective often involves strategies such as innovation, differentiation, or superior customer service.
In conclusion, the objectives of a business encompass both financial and non-financial aspects. While financial objectives focus on profitability and financial performance, non-financial objectives emphasize factors like customer satisfaction, employee well-being, and social responsibility. These objectives guide the decision-making process and shape the overall strategy of a business, ensuring its long-term success and sustainability.
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
|
|
Explore Courses for Commerce exam
|
|
Similar Commerce Doubts
Top Courses for CommerceView all
What are the objective of a business?
Question Description
What are the objective of a business? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about What are the objective of a business? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What are the objective of a business?.
What are the objective of a business? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about What are the objective of a business? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What are the objective of a business?.
Solutions for What are the objective of a business? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of What are the objective of a business? defined & explained in the simplest way possible. Besides giving the explanation of
What are the objective of a business?, a detailed solution for What are the objective of a business? has been provided alongside types of What are the objective of a business? theory, EduRev gives you an
ample number of questions to practice What are the objective of a business? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup