WEST UNIVERSITY OF TIMISOARA

FACULTY OF ECONOMICS
AND BUSINESS ADMINISTRATION
SPECIALIZATION: FINANCE & BANKING (English Line)

Business Aims and Objectives

Student:
Andreea Alexandra BANCU
Series: 8, Group: 1

2011
 WEST UNIVERSITY OF TIMISOARA

Table of Contents
Introduction ...................................................................................................................................................... 1
1. Objectives of Business – Meaning ........................................................................................................... 2
2. Business Objectives .................................................................................................................................. 3
3. Types of Business Objectives ................................................................................................................... 3
3.1. Economic objectives ........................................................................................................................ 4
3.1.1. Profit earning ........................................................................................................................... 4
3.1.2. Creation of customers .............................................................................................................. 4
3.1.3. Regular innovations ................................................................................................................. 4
3.1.4. Best possible use of resources ................................................................................................. 4
3.2. Social objectives ............................................................................................................................... 4
3.2.1. Production and supply of quality goods and services.............................................................. 4
3.2.2. Adoption of fair trade practices ............................................................................................... 5
3.2.3. Contribution to the general welfare of the society ................................................................. 5
3.3. Human objectives ............................................................................................................................ 5
3.3.1. Economic well being of the employees ................................................................................... 5
3.3.2. Social and psychological satisfaction of employees ................................................................ 5
3.3.3. Development of human resources .......................................................................................... 5
3.3.4. Well being of socially and economically backward people ..................................................... 5
3.4. National objectives .......................................................................................................................... 6
3.4.1. Creation of employment .......................................................................................................... 6
3.4.2. Promotion of social justice....................................................................................................... 6
3.4.3. Production according to national priority................................................................................ 6
3.4.4. Contribute to the revenue of the country ............................................................................... 6
3.4.5. Self-sufficiency and Export Promotion..................................................................................... 6
3.5. Global objectives .............................................................................................................................. 6
3.5.1. Raise general standard of living ............................................................................................... 6
3.5.2. Reduce disparities among nations ........................................................................................... 7
3.5.3. Make available globally competitive goods and services ........................................................ 7
4. Business Environment .............................................................................................................................. 7
4.1. Economic factors.............................................................................................................................. 7
 WEST UNIVERSITY OF TIMISOARA

4.2. Social factors .................................................................................................................................... 7

4.3. Political factors................................................................................................................................. 7
4.4. Technological factors ....................................................................................................................... 8
5. Objective’s Needs .................................................................................................................................... 8
6. Business Plan – Mission - Programs ......................................................................................................... 8
7. Alternative Aims and Objectives .............................................................................................................. 9
8. Changing Objectives................................................................................................................................. 9
References ....................................................................................................................................................... 9
 Introduction
You want to perform well in your examination; you want to earn money to sustain your
livelihood; you want to be a good citizen; you want to help the poor and needy people. What are
these? These may be different objectives that you want to achieve in your life. In the similar way
every business has several objectives, which it wants to achieve. What are those objectives?
In this project I will present you a various objectives of business:

When a sole trader sets up they may have some unstated aims or objectives - for example to
survive for the first year. Other businesses may wish to state exactly what they are aiming to do, such as
Amazon, the Internet CD and bookseller, who wants to “make history and have fun”.
An aim is where the business wants to go in the future, its goals. It is a statement of purpose, e.g.
we want to grow the business into Europe.
Business objectives are the stated, measurable targets of how to achieve business aims. For
instance, we want to achieve sales of €10 million in European markets in 2014.
A mission statement sets out the business vision and values that enables employees, managers,
customers and even suppliers to understand the underlying basis for the actions of the business.

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 1. Objectives of Business – Meaning
An objective is something you want to achieve.
Business objectives are the ends that an organization sets out to achieve. A business
creates business plans to enable it to achieve these ends - thus plans are the means to the ends. The
objectives and plans that an organization creates are determined by balancing the requirements of
the various stakeholders in the organization. The stakeholders are those individuals and groups that
are affected by and have an interest in how the business is run and what it achieves.
The objectives that a company establishes are based on blending the various interests of
these stakeholder groupings. For example, an objective to be the market leader, will benefit all
stakeholders because customers will receive high quality products, shareholders will receive high
dividends, employees will receive good wages, and so on.
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.

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 2. Business Objectives
 Profit  Ethical Issues  Market Share
 Global power  Efficiency  Social Issues
 Brand Recognition  Personal Satisfaction  Turnover
 Reputation and  Make a Fortune!  Customer
Image  Environment Satisfaction
 Share Price  Long Term  Brand loyalty
 Satisfying Survival  Market Power

3. Types of Business Objectives

Economic obj.
•Profit earning
•Creation of customers
•Regular innovation
•Best possible use of resources

Human obj. Social obj.

•Economic well being of the employees •Production and supply of quality goods
•Social and psychological satisfaction of and services
employees •Adoption of fair trade practices
•Development of human resources •Contribution to general welfare of the
•Economic well being of socially and society
economically backward people

Human obj. National obj.

•Raise general standard of living •Creation of employment
•Reduce disparities among nations •Promotion of social justice
•Make available globally competitive •Production according to national priority
globally competitive goods and services •Contribution to the revenue of the
country
•Self-sufficiency and export promotion

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 3.1. Economic objectives
3.1.1. Profit earning
Profit is the lifeblood of business, without which no business can survive in a competitive
market. In fact profit making is the primary objective for which a business unit is brought into
existence. Profits must be earned to ensure the survival of business, its growth and expansion over
time. Profits help businessmen not only to earn their living but also to expand their business
activities by reinvesting a part of the profits.
3.1.2. Creation of customers
A business unit cannot survive unless there are customers to buy the products and services.
Again a businessman can earn profits only when he/she provides quality goods and services at a
reasonable price. For this it needs to attract more customers for its existing as well as new
products. This is achieved with the help of various marketing activities.
3.1.3. Regular innovations
Innovation means changes, which bring about improvement in products, process of
production and distribution of goods. Business units, through innovation, are able to reduce cost by
adopting better methods of production and also increase their sales by attracting more customers
because of improved products. Reduction in cost and increase in sales gives more profit to the
businessman. Use of power-looms in place of handlooms, use of tractors in place of hand
implements in farms etc. are all the results of innovation.
3.1.4. Best possible use of resources
As you know, to run any business you must have sufficient capital or funds. The amount of
capital may be used to buy machinery, raw materials, employ men and have cash to meet day-to-
day expenses. Thus, business activities require various resources like men, materials, money and
machines. The availability of these resources is usually limited. Thus, every business should try to
make the best possible use of these resources. This objective can be achieved by employing
efficient workers, making full use of machines and minimizing wastage of raw materials.

3.2. Social objectives

3.2.1. Production and supply of quality goods and services
Since the business utilizes the various resources of the society, the society expects to get
quality goods and services from the business. The objective of business should be to produce better
quality goods and supply them at the right time and at a right price. It is not desirable on the part of
the businessman to supply adulterated or inferior goods which cause injuries to the customers.
They should charge the price according to the quality of the goods and services provided to the
society. Again, the customers also expect timely supply of all their requirements. So it is important
for every business to supply those goods and services on a regular basis.

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 3.2.2. Adoption of fair trade practices
In every society, activities such as hoarding, black-marketing and over-charging are
considered undesirable. Besides, misleading advertisements often give a false impression about the
quality of products. Such advertisements deceive the customers and the businessmen use them for
the sake of making large profits. This is an unfair trade practice. The business unit must not create
artificial scarcity of essential goods or raise prices for the sake of earning more profits. All these
activities earn a bad name and sometimes make the businessmen liable for penalty and even
imprisonment under the law. Therefore, the objective of business should be to adopt fair trade
practices for the welfare of the consumers as well as the society.

3.2.3. Contribution to the general welfare of the society

Business units should work for the general welfare and up-liftment of the society. This is
possible through running of schools and colleges for better education, opening of vocational
training centers to train the people to earn their livelihood, establishing hospitals for medical
facilities and providing recreational facilities for the general public like parks, sports complexes
etc.

3.3. Human objectives

3.3.1. Economic well being of the employees
In business employees must be provided with fair remuneration and incentives for
performance, benefits of provident fund, pension and other amenities like medical facilities,
housing facilities etc. By this they feel more satisfied at work and contribute more for the business.

3.3.2. Social and psychological satisfaction of employees

It is the duty of business units to provide social and psychological satisfaction to their
employees. This is possible by making the job interesting and challenging, putting the right person
in the right job and reducing the monotony of work. Opportunities for promotion and advancement
in career should also be provided to the employees. Further, grievances of employees should be
given prompt attention and their suggestions should be considered seriously when decisions are
made. If employees are happy and satisfied they can put their best efforts in work.

3.3.3. Development of human resources

Employees as human beings always want to grow. Their growth requires proper training as
well as development. Business can prosper if the people employed can improve their skills and
develop their abilities and competencies in course of time. Thus, it is important that business
should arrange training and development programmers for its employees.

3.3.4. Well being of socially and economically backward people

Business units being inseparable parts of society should help backward classes and also
people those are physically and mentally challenged. This can be done in many ways. For Instance,
vocational training programmed may be arranged to improve the earning capacity of backward
people in the community. While recruiting it staff, business should give preference to physically

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and mentally challenged persons. Business units can also help and encourage meritorious students
by awarding scholarships for higher studies.

3.4. National objectives

3.4.1. Creation of employment
One of the important national objectives of business is to create opportunities for gainful
employment of people. This can be achieved by establishing new business units, expanding
markets, widening distribution channels, etc.

3.4.2. Promotion of social justice

As a responsible citizen, a businessman is expected to provide equal opportunities to all
persons with whom he/she deals. He/She is also expected to provide equal opportunities to all the
employees to work and progress. Towards this objective special attention must be paid to weaker
and backward sections of the society.

3.4.3. Production according to national priority

Business units should produce and supply goods in accordance with the priorities laid down
in the plans and policies of the Government. One of the national objectives of business in our
country should be to increase the production and supply of essential goods at reasonable prices.

3.4.4. Contribute to the revenue of the country

The business owners should pay their taxes and dues honestly and regularly. This will
increase the revenue of the government, which can be used for the development of the nation.

3.4.5. Self-sufficiency and Export Promotion

To help the country to become self-reliant, business units have the added responsibility of
restricting import of goods. Besides, every business units should aim at increasing exports and
adding to the foreign exchange reserves of the country.

3.5. Global objectives

3.5.1. Raise general standard of living
Growth of business activities across national borders makes available quality goods at
reasonable prices all over the world. The people of one country get to use similar types of goods
that people in other countries are using. This improves the standard of living of people.

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 3.5.2. Reduce disparities among nations
Business should help to reduce disparities among the rich and poor nations of the world by
expanding its operation. By way of capital investment in developing as well as underdeveloped
countries it can foster their industrial and economic growth.

3.5.3. Make available globally competitive goods and services

Business should produce goods and services which are globally competitive and have huge
demand in foreign markets. This will improve the image of the exporting country and also earn
more foreign exchange for the country.

4. Business Environment
Conditions or situations that affect business activities may be regarded as the environment
of business. This environment consists of forces and factors internal or external to a business firm.
The skill and ability of employees, their attitude to work, relations between managers and
subordinates etc. may be regarded as internal environment of business. These are important
factors, which may affect business operations. But these are within the control of the businessman.
By taking suitable steps the conditions can be improved.
On the other hand, external environment refers to all those aspect of the surrounding of
business, which are not within the control of the managers and may affect business activities to a
great extent.
We may classify these factors as:

4.1. Economic factors

Economic factors include those factors which affect the business environment due to
changes in income level of the people, rates of interest on borrowing, availability of capital, tax
rates, demand and supply of goods and also changes in government economic policies, etc. For
example, you may have noticed that if the level of income of people goes up, there is increased
demand for goods and services. Similarly when interest rates on loans are lower people spend
more on buying durable goods like, car, home etc. Growth of business naturally takes place as a
result of increased spending by consumers.

4.2. Social factors

The nature of goods and services in demand depends upon the changes in habits and
customs of people in the society. With rise in population the demand for household as well as other
goods has increased. The nature of food and clothing has also changed to a great extent. Demand
for packaged food and ready-made garment has increased in recent times. All these force the
business to produce goods accordingly. So the social and cultural factors have also affected the
production pattern of business.

4.3. Political factors

Business environment is adversely affected by the absence of political stability. The
workers’ union may demand higher wages, may indulge in frequent strike etc., which affect the

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normal functioning of business. Problems of law and order situation in border areas, conflicts
between countries, absence of favorable economic as well as export– import policy also affect the
business activities. Business activities suffer serious set backs under such circumstances.

4.4. Technological factors

Technological advancement always leads to improvement in the process of production,
transportation and communication. Change in technology is mostly associated with better service
and cost efficiency. In recent years, information processing and storage with the use of computers
and telecommunication facilities have developed rapidly. People now prefer to use mobile phones
in place of landline phones. Now-a-days electronic appliances have replaced electrical equipments
very widely. Business activities are bound to suffer if enterprises do not adopt up-to-date
technology as and when necessary.

5. Objective’s Needs
Objectives need to meet a number of criteria if they are to be useful:
4.1. If possible it is helpful to quantify objectives (e.g. to increase market share to 55%,
to increase customer satisfaction levels to 95% etc.);
4.2. They need to be challenging - Objectives shouldn't be too easy to achieve;
4.3. They need to be attainable - They shouldn't be unrealistic;
4.4. They should be understandable - Easy to communicate.

6. Business Plan – Mission - Programs

A business plan will then enable an organization to achieve its objectives. The business
plan must be set within a time frame and set out how the organization, and the various components
of the organization will work towards meeting required objectives. Responsibility for delivering
various parts of the plan will be allocated to key individuals, and performance targets will be
established which enable the plan to be delivered. The business will create a series of policies,
programmers and budgets to enable it to achieve planned targets. It is also essential from the outset
to clarify how the plan will be evaluated on an ongoing basis.
Sets out the overall purpose of the organization often in a short mission statement.
Programs are one off sets of activities designed to meet specific end targets, e.g. a training
program to introduce employees to a new piece of legislation. Budgets: Are plans that are set out
in number, relating to such aspects as sales, marketing, financial performance etc.

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 7. Alternative Aims and Objectives
Not all businesses seek profit or growth. Some organizations have alternative objectives.
Examples of other objectives:
 Ethical and socially responsible objectives – organizations 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 organizations 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 organizations – their aims and objectives are led by the beliefs
they stand for.

8. 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.

References
 http://www.bized.co.uk/learn/business/strategy/index.htm;
 http://www.thetimes100.co.uk/theory/theory--company--321.php#ixzz1O3zAnhs5;
 http://www.tutor2u.net/.