Common Business Objectives (DP IB Business Management): Revision Note
An introduction to common business objectives
The most effective objectives are clearly stated and allow progress to be assessed
These types of objectives can be summarised using the acronym SMART
SMART objectives
Strategic, tactical and operational objectives should be
Specific - what exactly the business is measuring, such as the value of sales or sales volume
Measurable - a quantifiable success measure, such as a percentage increase
Agreed - the objective is shared with workers and perhaps mutually agreed
Realistic - whilst ambitious, it is capable of being achieved in normal circumstances
Time-bound - a date or time by which the objective should be achieved
A SMART tactical objective

Once objectives have been determined, leaders develop strategies which plan how they are to be achieved
Strategies are medium- to long-term plans which should be monitored carefully and reviewed if necessary
Effective strategies take into account the businesses position in the market as well as external factors that may affect their chances of success
Common strategic business objectives

Common strategic objectives in the private sector
Profit maximisation
Most firms have the rational strategic objective of profit maximisation
Profit is calculated as total revenue (TR) minus total costs (TC)
To maximise profits, firms can either increase their sales revenue or reduce their costs
Firms regularly analyse their costs to find ways to reduce them and improve overall profitability
Growth
Some firms have the strategic objective of growth
These firms often aim to increase their sales revenue or market share
By maximising revenue and increasing output, they can benefit from economies of scale
A growing firm is generally less likely to fail than one that remains static
Ethics and social responsibility
An increasing number of firms now launch with ethical or socially responsible objectives
These often focus on issues such as climate action, poverty reduction or tackling inequality
Although they still need to make a profit to survive, they may accept lower profits if it means achieving their social aims
Survival
In difficult markets or during times of crisis, survival becomes the main strategic objective
This is especially common for new start-ups, where managing cash flow carefully is essential
For example, many businesses shifted their focus to survival during the recent pandemic, often relying on government support to continue trading and begin recovery
Protecting shareholder value
This is a common objective for public limited companies, where share value and dividend payments are key concerns
Strategic decisions may prioritise maintaining or increasing shareholder value above other objectives
This focus can help attract new investors and maintain the confidence of existing shareholders
Changing objectives in a dynamic environment
Businesses operate in a dynamic (constantly changing) environment, which may cause them to pivot between different objectives
Business objectives are influenced by a range of internal and external factors
These changes are often necessary to ensure that the business remains competitive, profitable, and compliant with regulations
Factors that cause business objectives to evolve
Factor | Explanation | Example |
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Market conditions |
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Technology |
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Performance |
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Legislation |
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Ethics and social change |
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Internal reasons |
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