The hierarchy of objectives
SMART - acronym helps management set effective objectives
S - Specific; the objective should state exactly what is to be achieved.
M - Measureable; an objective should be capable of measurement - so that it is possible to determine success.
A - Achieveable; the objective should be realistic given the circumstances in which it is set.
R - Relevant; objectives should be relevant to the people responsible for achieving them.
T - Time Bound; objectives should be set with a time-frame in mind. These deadlines should be realistic.
Business should follow SMART
SMART objectives focus the business on what is important, ensuring that they stay on track.
# Strategic vs Tactical objectives
Strategic objectives focus on the long term, and are set by the board.
Tactical objectives tend to be more short term, and can be set by line managers.
# Business Aims & Objectives Activity Worksheet
# Explain the difference between an aim and an objective
An aim is an overall target or goal for the business. Whereas objectives are smaller targets to help reach the aim. A business may have several different objectives to reach a single aim.
# Why do businesses have aims and objectives?
This gives them a purpose and a target to work towards.
# Describe what financial aims are
Increasing sales, revenue or sales. Anything related to directly increasing cashflow.
Survival: Common aim for new businesses, simply focuses on keeping things going while they get started.
Profit: Simply looking to earn more revenue than the sum of their costs. Increasing profit would allow greater wealth to the the business.
Sales: To aim to sell a certain amount of a product, gives employees a common goal.
Market share: To increase market share by a set percentage over the course of a year.
Security: The entrepreneur being able to withdraw enough to be financially stable.
Many financial objectives require attention to be paid to Pricing
# Explain non-financial aims
- Not usually linked to monetary success
- Might be a solution to a social issue
- Frequently personal to the founder(s)
Social: Aims committing to act ethically.
Satisfaction: The aim of turning a passion or a hobby into a business can often be a common start-up aim.
Challenge: The challenge of starting something from scratch. Aiming to succeed on your own & with your own terms.
Control: Having control over decisions made, your working pattern and the business direction.
# Suggest whether you believe non-financial aims are necessary for a profit-making business.
Yes, when people are going to give money to a business, they are likely to choose the most ethical option if it is financially viable to them. Therefore, businesses that have non-financial aims will be more inviting to new customers.
# Do you believe Lush has benefitted from having clear non-financial aims?
Yes, people knowing that no animal testing has occured makes them feel more comfortable when buying products from Lush. Things like this become a selling point and good publicity.
# Explain the reasons why businesses aims and objectives differ
Different markets will have different problems and audiences, looking for different things. And as a business grows, it will need to update it’s aims and objectives to remain competitive. It does not make sense for LEGO to aim to reduce animal testing - because they don’t test on animals. Lush however has benefitted from that.