A LevelBusinessCambridge (CIE)Revision NotesBusiness & its EnvironmentBusiness ObjectivesObjectives in Different Organisations

Objectives in Different Organisations (Cambridge (CIE) A Level Business)

Revision Note

Lisa Eades

Written by: Lisa Eades

Reviewed by: Steve Vorster

Private Sector Business Objectives

  • Private sector businesses usually aim for commercial success

  • In order to achieve this, they commonly pursue a limited range of objectives
     

Common Objectives in the Private Sector

Objective

Explanation

Profit maximisation

  • Most firms have the rational strategic objective of profit maximisation

  • Profit = Total Revenue (TR) - Total Costs (TC)

  • To maximise profits, firms can either increase their sales revenue or decrease their costs

    • Firms continuously analyse their costs to see if they can reduce them so that profit can be maximised

Growth

  • Firms with a growth objective often focus on increasing their sales revenue or market share

  • Firms will also maximise revenue in order to increase output and benefit from economies of scale

  • A growing firm is less likely to fail

Ethics & social responsibility

  • An increasing number of firms are launching with ethical or socially responsible objectives

    • These typically include a focus on climate action & addressing poverty or inequality
       

  • They still require profit to survive, but will accept less than if they were profit-maximising as long as they are meeting their social objective

Survival

  • Challenging market conditions, difficult periods of change or crisis can require a focus on keeping the business going

  • Survival is also a common strategic objective for new business start-ups and careful cash-flow management is likely to be at its core

  • The recent pandemic required many businesses to adopt a short-term survival objective, with many taking advantage of government support to enable them to continue trading and recover 

Protecting shareholder value

  • A common objective for public limited companies where the value of shares and dividends payable to shareholders are important metrics
     

  • Strategic objectives may seek to protect shareholder value above all else

  • Having this objective will help to encourage new investors and satisfy existing shareholders

Public Sector Objectives

  • The public sector refers to organisations that are owned or controlled by the government

  • The main goal of organisations in the public sector is usually to provide services such as education, healthcare or emergency services that may not be provided by businesses

  • Public sector organisations tend to be focused on service objectives, including

    • The provision of reliable and efficient services at a reasonable cost

    • Meeting performance targets set by the government

    • Encouraging social and economic development

    • Creating jobs or increasing employment levels

  • Public sector organisations may also set financial objectives to provide a return to the government to reinvest

    • Although not the primary aim, having a positive financial return in the public sector is generally welcomed by governments

Social Enterprise Objectives

  • Social enterprises operate in the private sector but do not have making a profit as their primary focus

    • They seek to make a profit in order to spend the money on achieving their social objectives
       

  • Objectives may include: 

    • Social: to provide jobs and support for disadvantaged groups in society, such as the disabled or homeless

    • Environmental: to protect the environment

    • Ethical: to operate the business in a responsible way

    • Financial: to make a profit to invest back into the social enterprise to expand the social work that it performs

  • Butterfly Books is a social enterprise that publishes children’s educational books in the UK

    • Their aim is to 'work to educate, inspire and entertain children, aiming to change future generations by reducing gender bias in job roles'

    • A recent book entitled 'My Mummy is an Engineer' challenges gender stereotypes

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    Author
    Reviewer
    Lisa Eades

    Author: Lisa Eades

    Expertise: Business Content Creator

    Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.

    Steve Vorster

    Author: Steve Vorster

    Expertise: Economics & Business Subject Lead

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.