Topic 3 - Objectives 03, 2015 · aims/objectives of the organisations and be able to explain any similarities or ... •The business gains a good reputation for its caring nature.

Topic 3 - Objectives

Higher Business Management

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Learning Intentions / Success Criteria

Learning

Intentions

Objectives of

businesses

Success Criteria

Learners should be aware of the following

aims/objectives of the organisations and be

able to explain any similarities or

differences in these aims/objectives.

• Corporate social responsibility

• Growth

• Satisficing

• Managerial objectives

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Corporate Social Responsibility (CSR)

In order to have a positive public image and gain

customer trust, many businesses look to improve

the working conditions of their employees, their

treatment of the environment and working with

society.

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Methods to Ensure Good CSR

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Methods of good corporate social responsibility

can be carried out in the following areas:

• ethical and environmental responsibilities

• philanthropy

• economic responsibilities

• legal responsibilities.

Ethical and Environmental

Responsibilities

• Avoiding the use of child labour.

• Paying staff a living wage instead of minimum wage.

• Making sure raw materials come from sustainable sources (sources

that can be replaced), e.g. trees when paper is being manufactured.

• Trying to reduce its carbon footprint as much as possible, e.g. using

the most environmentally friendly method of distribution.

• Making sure suppliers are paid fairly for what they produce, e.g. by

adopting a fair trade policy.

• Recycling as much as possible / minimising packaging for

customers.

• Providing opportunities for employees to participate in physical

activity and promoting healthy eating, e.g. providing cycling

facilities to get to work or providing healthy options in the canteen.

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Philanthropy

Donate to charity.

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Economic Responsibilities

Use fair and competitive marketing.

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Legal Responsibilities

Abide by laws that govern businesses.

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Advantages of Positive CSR

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• The business gains a good reputation for its

caring nature.

• Customers who agree with the aim are likely to

use the business.

• The business can attract high-quality staff who

believe in the ethics of the business.

• Society and the environment are kept in good

order, which will benefit the business in the

long run.

Satisficing

• Satisficing means aiming for a

satisfactory or adequate result rather

than the best possible outcome,

especially during a recession.

• Most private sector businesses

would ideally aim to maximise

profits; however, through satisficing,

a business could aim only to make a

level of profit which is good enough

to satisfy the main stakeholders,

perhaps making enough profit to

cover satisfactory dividends to

stakeholders.

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Managerial Objectives

• Managers may try to improve their status within the company, for

example, expansion into new markets, or developing new technologies.

• Managers might have their own internal objectives, either financial or

non-financial.

• They may aim to have many subordinates reporting to them in order to

increase the responsibility, and therefore their salary.

• They may also want to receive bonuses for achieving certain targets,

other fringe benefits (‘perks’) such as a company car or promotion.

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Growth

Businesses might aim to grow for a number of reasons:

• To increase sales and profit which in turn will increase the return on

investment for owners (e.g. dividends for shareholders).

• To increase the number of customers which will increase profits and market

share, and may enable the organisation to become a marker leader.

• To take advantage of economies of scale (discounts for bulk buying),

thereby reducing costs.

• To reduce the risk of a takeover by another organisation.

• To gain a better reputation in the marketplace which will encourage new

customers to buy, thereby increasing sales and ultimately profit.

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Advantages/Disadvantages of Internal

Growth

Advantages

• Can be less risky than

taking over another

business

• Can be financed through

internal sources

• Can build on existing

strengths such as brands

and good customer

relations.

Disadvantages

• A slower method of

growth

• Limited by the size of

existing market.

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