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Business Studies

Aims and objectives

Setting objectives

In most businesses, the owners decide on the objectives for the business.

A close up of someone about to write on a pad of paper with a pencil

When a business first starts trading it has few loyal customers and no reputation. The most likely objective for a start up business is simply survival. As the business grows and begins to win market share, the aim may shift towards expansion and/or increasing profits.

Some owners have a vague idea about their objectives. The best types of objective are SMART. Smart stands for:

  • Specific: clearly state what is to be achieved, eg increased profits.
  • Measurable: the desired outcome is a number value that can be measured, eg increase profits by 10%.
  • Agreed: all staff are involved in discussing and agreeing an aim.
  • Realistic: the target is possible given the market conditions and the staff and financial resources available.
  • Timed: the target will be met within a given period of time, eg 12 months.

An example of a SMART objective is 'to increase profits by 10% within the next 12 months'. SMART objectives allow the performance of a business to be assessed.

While owners have a major say in deciding the aims of a business, other interest groups called stakeholders are usually considered. Stakeholders are any group of people interested in the activities of the business - they could be managers, staff or customers. When owners sacrifice some profit to pay staff an annual bonus, this is an example of stakeholder consideration.

To learn more about stakeholders, read this Revision Bite.

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