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Business ObjectivesLecturer: Abdel Mahmoud B. M(SIU)

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Business objectives are the goals of businesswhat the business wants to achieve. All businesseshave their own objectives.

Different stakeholders or shareholders (peoplewho have some financial interest in the business)may have different objectives in the business. Forexample, the owners of the business may considermaking profit to be an important objective. Butemployees may regard job security, goodworking condition, and good reward as theirimportant objective.

Business Objectives

-Definition

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It is of great importance for a business tohave well-defined objectives. Theseobjectives will help the business to be clearabout what it wants to achieve or where itwants to go.

With objectives, the performance of abusiness can be assessed according to astandard, that is to say, how effectively thebusiness has achieved its objectives.

Business Objectives

-Importance

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There are six major types of businessobjectives:

1. Survival,2. Profit Maximization,3. Growth,4. Managerial Objectives,5. Sales Revenue Maximization,6. Image and Social responsibility.

Business Objectives

-Major Types

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Objective of survival:

Survival objective is essential for any business in that no

survival means no today and no future. Circumstances for a business to consider survival to be

important can be seen in the following table:

Business Objectives

-Survival

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Definition:Profit maximization means increasing profit asmuch as possible or producing a level of output

which brings the most profit for the business.Usually, the main objective of a private sectorbusiness may be to maximize its profits.However, things may be different for a public

sector business. The main objective of a publicsector business may be to supply the best servicein the past, although nowadays, they are offeringservices in a more and more business like way.

Business Objectives

-Profit Maximization

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Definition:

Growth objective may refer to the goal of

a business to become larger, stronger ormore competitive.

Many businesses regard growth as theirmain objectives. There are some reasonswhy businesses must choose growth as animportant objective. Possible reasons arelisted in the following table:

Business Objectives

-Objective of Growth

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Possible reasons for a business to regardgrowth as an objective:

1. To survive, no growth may mean final death.2. To introduce new products in order to meet customer

changing needs.

3. To reduce risks of business: In fierce competition, if abusiness can not become strong enough, it is more likely

to be eaten up by other stronger competitors.4. To have low costs and more profits on a larger scale

(economy of scale).

5. To make employees, managers, and owners all feelhappy and secure

Business Objectives

-Objective of Growth

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Question for your critical thinking:

Why and how do you think the growth of abusiness may make its employees, managers andowners all feel happy and secure?

Business Objectives

-Objective of Growth

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Definition:

The managers own objectives in the business.

Importance:As we know, the owners of the business do notusually control the day to day running of thebusiness. It is the management that control and

run the company according to their ownobjectives and the owners strategic decisions.

Common examples of managerial objectives areseen in the following table:

Business Objectives

-Managerial Objectives

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Reasons:

1. Sometimes, when managers and employees arepaid according to their sales revenues rather than

the created profit, sales revenue maximizationmay become the main objective of the business.

2. The business wants to enlarge the market sharefirst and then benefits in the long run.

Shortcomings:This may be a shortcoming for a business. Profitmaximization for a business should be moreimportant than sales revenue maximization inwhatever situations.

Business Objectives

-Sales Revenue Maximization

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Social Responsibility definition: managementphilosophy that highlights the social and economiceffects of managerial decisions. Or the

managements acceptance of the obligation toconsider profit, consumer satisfaction, and societalwell-being of equal value in evaluating the firmsperformance.

Image and social responsibility have become moreand more important objectives of businesses. Thereare some reasons why businesses must considerimage and social responsibility to be their objectives,which are illustrated in the following table:

Business Objectives

-Image and Social Responsibility

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Business Objectives

-Four Types of Business SocialResponsibility