1.3 Business objectives

A business needs to know where it is going before it can decide how to get there. Objectives give that direction, and they connect a long term vision to everyday decisions.

Vision and mission statements

A vision statement is the business's big, long term dream, describing what it hopes the world, or the business, will look like one day. For example, "A world where nobody has to choose between affordable and sustainable food." It is meant to inspire, not to be measured.

Mission statement

A statement of the business's purpose today, saying what it does, for whom and how. For example, "We sell locally grown, seasonal produce at supermarket prices."

Both help to motivate employees, guide decisions and communicate values to stakeholders. Critics point out that they can be vague, are hard to measure, and are sometimes little more than public relations.

The hierarchy of objectives

The hierarchy of objectives just means that big, vague aims at the top are broken down into smaller, more specific targets lower down. Each level answers the question "how?" for the level above it, and "why?" for the level below.

Strategic objectives are long term goals for the whole organization, set by senior management (for example, "become the market leader in Southeast Asia within five years"). Tactical objectives are medium term goals for departments that help achieve the strategy (for example, "open 12 stores in Vietnam by 2027"). Operational objectives are the short term, day to day targets for teams and individuals (for example, "serve every customer within three minutes").

Good objectives are often SMART:

1. Specific
2. Measurable
3. Achievable
4. Realistic
5. Time-bound

Common business objectives

• Growth: increasing sales, market share or size, to gain economies of scale and security.
• Profit: the reward for risk, a source of finance for reinvestment, and a measure of success.
• Protecting shareholder value: keeping the share price and dividends attractive so that investors stay loyal.
• Ethical objectives: acting in a morally correct way, for example fair wages, honest marketing, and sourcing that does not harm people or the environment.

Objectives change over time. A startup may focus on survival, then growth, then profit. A crisis, new competitors or new owners can all shift priorities.

Corporate social responsibility (CSR)

CSR means a business takes responsibility for the impact of its activities on society and the environment, going beyond what the law requires. Examples include reducing emissions, supporting local communities, and making sure suppliers treat their workers fairly.

What counts as responsible behaviour changes over time and differs between cultures. Practices that were normal twenty years ago, such as single use plastic packaging, may now damage a firm's reputation.