Financial & Non-financial Objectives (Edexcel IGCSE Business)

Revision Note

Written by: Lisa Eades

Financial Objectives

Business objectives are targets that guide operations and drive growth in an organisation
Setting and sharing clear objectives can help a business to succeed for several reasons
- Business owners have a focus for their decision making
- Employees have common goals to work towards and can be motivated to achieve targets
- Performance can be weighed up against objectives and suitable adjustments made for future success
Objectives are most useful when they are SMART
- Specific: it states precisely what is to be achieved
- Measurable: the desired outcome is expressed in quantitative terms
- Achievable: it is possible with the people and resources involved
- Realistic: it is possible with the resources the business has at its disposal
- Time specific: it is clear when, precisely, the objective is to be achieved
An example of a SMART objective might be for a business to increase its sales revenue by 10% by the end of the year
Financial objectives are specifics goal related to the financial performance, resources or structure of a business
- They are particularly important in the private sector as owners are likely to want to make money

Main Types of Financial Objectives

Objective	Explanation	Examples
Survival	Survival involves keeping a business operating for a certain amount of time, such as its first year of operation Survival is also a key focus during periods of challenging business conditions or when strong competition emerges	Camping Sous les Étoiles in France focused on survival during the 2020 global pandemic as travel restrictions limited holidays
Profit	Profit is the difference between the total sales revenue and the total costs of the business Profit can be reinvested into a business or shared with business owners as a reward for risking their investment Profit maximisation involves making as much profit as possible	Belgium's Brewery de Blaugies aims to maximise profits to fund the building of new production and distribution facilities that are needed for its planned expansion
Sales	Selling increasing volumes of products can help a business to increase its market share High sales can also increase awareness of a business and its brands Large-scale businesses often benefit from lower average unit costs	France's Le Creuset has increased sales of its luxury cookware across Europe by opening sales outlets and improving its online store
Market share	Market share is the proportion of a market controlled by a particular company, brand or product Businesses with high market share can dominate the market and become well-known Market leaders may be able to charge higher prices than rivals and make more profit	Since 2018, Ediya Coffee has increased the number of outlets it operates in South Korea and introduced a delivery service to gain market share from leading rival Paris Baguette
Financial security	Business owners may simply want to earn a living from the risk and effort they put in Satisficing may be enough for a business owner to pursue a desired lifestyle	Reema Koch runs her small eco guesthouse in Malta during summer months and spends winter working with animal charities in Turkey

Non-financial Objectives

Non-financial objectives are targets that are not directly connected to making money
Achieving non-financial objectives is often the main focus of businesses in the public sector and the voluntary sector
Many profit-making businesses also set non-financial objectives that compliment their key financial objectives

Main Types of Non-financial Objectives

Objective	Explanation	Examples
Social	Providing a reliable, high-quality service to a particular community is the focus of many public sector organisation Charities and cooperatives are often focused on improving human well-being or the environment Businesses increasingly aim to meet the needs of a range of stakeholders by providing employment opportunities, being eco-friendly or contributing to the local community	After visiting Argentina in 2006 Blake Mycoskie set up TOMS Shoes, pledging to donate one pair of shoes for every one sold
Personal satisfaction	Achieving success by doing something enjoyable can be satisfying for business owners Spotting an opportunity and pursuing it as a business can be a matter of great pride	Former schoolteacher and keen environmentalist Laura Hirsch established Grüne Kleinvolk in 2022 as a pre-schoolers' forest activity centre in Germany's Schwarzwald
Challenge	Using and developing skills can present interesting challenges Some business owners love solving problems or enjoy seeing the results of hard work	Since starting her interior design business in Malta in 2013 Kristine Bonnici has achieved qualifications in accountancy, marketing and business leadership
Independence & control	Independence to make their own decisions can be a key motivator for entrepreneurs A business owner may want to control their own time and business direction without interference from others	After being made redundant in 2020 sound engineer Vinay Patel set up a talent agency in Mumbai, focused on sourcing new talent for the city's successful film industry

Examiner Tips and Tricks

You may be asked to give an example of a business objective

Look at the question carefully - has it asked you to give a financial objective or a non-financial objective?

Last updated: 13 November 2024

You've read 0 of your 5 free revision notes this week

Sign up now. It’s free!

Join the 100,000+ Students that ❤️ Save My Exams

the (exam) results speak for themselves:

Did this page help you?

Next:Reasons why Business Objectives may Change