Purpose of setting objectives
Why do businesses set objectives?
Businesses set aims and objectivesA business aim is the overall target or goal of the business, whereas business objectives are the steps a business needs to take to meet its overall aims. to help with decision making. This allows businesses to decide what their main focus should be. Aims and objectives also show key stakeholders, such as investors and employees, the direction the business is planning to take. This could make them more likely to support new projects. Employees may also be motivated by these goals, encouraging them to work harder to achieve them. Aims and objectives also allow the business to set targets which can then be used to measure progress.
Objectives are set to help a business to achieve its aims. Objectives are often set using the SMART rule.
- S – Specific
- M – Measurable
- A – Agreed
- R – Realistic
- T – Time-bound
Mo and Emma set some SMART objectives to help them focus on improving sales
Why aims and objectives differ between businesses
Aims and objectives are tailored to the particular business. The main reasons that aims and objectives differ between businesses are that businesses have different purposes, different levels of competition, and business operations vary in size and scale.
The type of business
A private sector business will always have profit as the main focus of its aims, whereas not-for-profit organisations such as charities and social enterprises are more likely to focus on social or ethical objectives.
Business size and scale
The size and scale of a business has a huge impact on its aims and objectives. For example, a new business will most likely be aiming for survival Where a business aims to keep operating., whereas an already established business may aim for profitsThe amount of money made after all expenses have been paid.. Some small businesses may have objectives linked to expanding as a business and increasing the scale of their operations.
The level of competition in the market
If a business is in a very competitive market, their aims and objectives may focus on developing a way to gain competitive advantageAn advantage gained over a business' competitors, either by offering lower prices or by offering better products or services that justify a higher price. and therefore increase their market shareThe percentage of a market taken by a particular business or product.. If a business doesn’t have much competition, they may be more able to focus on growth.
