Using Objectives to Judge Success (AQA GCSE Business)

Financial Measures of Success

• Businesses can use financial objectives to reflect on and measure their level of success

  • Financial measures of success are commonly used as metrics in business objectives

  • Managers' rewards, such as bonuses and commission, can be linked to the achievement of financial objectives

  • The financial performance of large public limited companies is often reported in the media

Common Financial Measures of Success

Non-financial Measures of Success

• Business success can be measured in non-financial ways too

  • Small business increasingly use non-financial methods to measure success

  • Financial measures such as satisficing and survival still need to be achieved

• Common ways businesses measure non-financial success include

  • Social entrepreneurship

    • Many entrepreneurs aim to address social issues. Helping others still needs to have a financial objective behind it for a business to succeed and be sustainable

      • E.g. After a trip to Argentina in 2006, Blake Mycoskie started TOMS Shoes, using some of his own money to launch the company. TOMS pledged to donate one pair of shoes for every one sold

  • Personal satisfaction

    • This may be gained from doing what the entrepreneur wants to do

      • E.g. Cheran Friedman starting up Cheran's Bakery in Sittingbourne, Kent to pursue her passion for baking fancy cakes

  • Challenge

    • This could be setting up something that nobody else has thought of

    • It may be a chance to prove to others (or to the entrepreneur) that something can be done

      • E.g. Nick Rowley, chief executive of Sky Commuter, identified the serious difficulties of travelling between the university cities of Oxford and Cambridge and set up a charter flight business, offering a twice-daily 25-minute shuttle between them

  • Independence and control

    • The entrepreneur may want more control over their own time and the direction of their business

    • Independence enables people to do things their way, which can be very motivational

      • E.g. Disillusioned with working for a large London-based marketing company, the owner of Hire a Hubby Faversham Ltd established his small handyman business, working four days a week providing services for customers in his local community

• Increasingly larger businesses are taking non-financial measures of success more seriously

  • Some investors favour socially responsible businesses and avoid making investments in businesses with poor ethical standards

  • Positive public relations can be gained from supporting community causes and social initiatives

  • Annual reports contain references to aspects such as fair working practices and progress made on reducing environmental impacts

  • Formal recognition for being a good employer from organisations such as Best Companies to Work For can aid recruitment