Chapter 4: business objectives
The importance of objectives
Every business has an aim in life. Without the objectives the aim of the business should hardly be
achieved. In addition, for an aim to be successfully achieved there has to be an appropriate strategy or
detailed plan of action in order to ensure that resources are correctly directed towards the final goal.
The most effective business objectives usually meet the “SMART” criteria:
S- Specific: objectives should focus on what the business does and should apply directly to that business.
A hotel may set and objective of 75% bed occupancy over the winter period. This objective is specific to
M-Measurable: objectives that have a quantitative value are likely to prove to be more effective targets
for directors and staff to work towards. For instance, to increase sales in the south-east region by 15%
A-Achievable: setting objectives that are almost impossible in the time frame given will be pointless.
They will demotivate staff who have the task of trying to reach these targets. So objectives should be
R-Realistic: objectives should be realistic when compared to the resources of the company and should
be expressed in terms relevant to the people who have to carry them out. So informing a factory cleaner
about “increasing market share” is less relevant than a target of reducing usage of cleaning materials by
T-Time: a time limit should be set when an objective is established – by when does the business expect
to increase profits by 5%? Without a time limit, it will be impossible to assess whether the objective has
actually been met.
These are very long term goals which a business hopes to achieve. The core of a business´s activity is
expressed in its corporate aims and plans. A corporate aim could be to give shareholders maximum
returns on their investment by expanding the business.
What are the benefits of corporate aims?
- They become the starting point for the entire set of objectives on which effective management
- They can help develop a sense of purpose and direction for the whole organisation if they are
clearly and unambiguously communicated to the workforce.
- They allow and assessment to be made, at a later date, of how successful the business has been
in attaining its goals. - They provide the framework within which the strategies or plans of the business can be drawn
up. A business without a long-term corporate plan or aim is likely to drift from event to event
without a clear sense of pu