Setting Business Aims & Objectives Flashcards

All 19 cards in this deck

What is the difference between a business aim and a business objective?

Aims are overall long-term targets; objectives are the short-term steps taken to meet those aims.

What is meant by the objective of business survival?

Aiming to keep operating for a certain period of time, commonly the first year.

What is meant by profit maximisation as a business objective?

Aiming to make the largest possible profit, usually pursued once the business has reached break-even.

What is meant by growth as a business objective?

Increasing the number of employees, products sold or sales income — domestically in the same country or internationally in other countries.

What is market share?

The percentage of the total market that a business occupies within its industry.

What is meant by customer satisfaction as a business objective?

A non-financial objective measuring how happy customers are with the products or services provided by the firm.

What are social and ethical objectives?

Non-financial objectives linked to operating in an environmentally friendly or ethical way, or meeting a social need.

What is meant by shareholder value as a business objective?

Increasing the value of the company's shares in order to keep shareholders happy.

What is the difference between financial and non-financial objectives?

Financial objectives relate to money; non-financial objectives relate to anything other than making money.
e.g. profit is financial, customer satisfaction is non-financial.

True or false? Profit maximisation is the usual objective of a business that has not yet broken even.

False. Such a business usually aims for survival first; profit maximisation is pursued once break-even is reached.

What are the three main reasons objectives differ between businesses?

The size of the business, the level of competition faced, and the type of business (e.g. not-for-profit).

What is a not-for-profit organisation, and what does it focus on?

A business such as a charity or social enterprise that focuses on social or ethical objectives rather than profit.

What objectives do businesses in highly competitive markets tend to focus on?

Gaining a competitive advantage and increasing market share.

Give three objectives that larger, more established businesses are likely to set that a start-up would not.

Becoming the dominant business in the market, international expansion, increasing shareholder value (also ethical and environmental objectives).

How do a business's objectives typically change between a recession and a boom?

In a recession it may focus on survival rather than growth; in a boom expansion becomes the main focus.

Name three ways a business can measure its success other than by profit.

Sales, market share, growth, customer satisfaction, repeat customers or shareholder value (any three).

If a business uses customer satisfaction to measure success, what would it look at?

Whether the number of customer complaints has reduced.

What is the purpose of setting objectives in running a business?

To set priorities and to make it possible to check on progress and identify improvements.

How can setting objectives help different parts of a business, such as marketing and operations?

It helps them work together smoothly towards the same target.