Financial & Non-financial Objectives (Edexcel IGCSE Business)

Revision Note

Lisa Eades

Written by: Lisa Eades

Reviewed by: Steve Vorster

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?

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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.