Objectives in Different Organisations (CIE A Level Business)

Revision Note

Author

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

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 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

to absolutely everything:

the (exam) results speak for themselves:

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