This article looks at how private business organizations decide on their business objectives. The most common business objectives for businesses in the private sector are concerned with:
1. Survival.
2. Growth.
6. Maximizing short-term sales revenue.
7. Maximizing shareholder value.
8. Corporate Social Responsibility (CSR).
Survival
Survival is likely to be the key objective of most new business start-ups.
Survival as a business objective is normally a short-term goal (less than one year) that established businesses do not worry about.
It is because of the high failure rate of new businesses, as they are trying survive for the first two years of trading. Many new businesses fail in their initial years on the market, so business survival becomes an important initial aim for entrepreneurs.
Possible causes behind the decision to survive
Being a start-up. In early stages of trading, businesses begin small and then grow. New firms may encounter a number of problems at first such as lack of management experience, lack of quality resources, strong competition, unforeseen problems (e.g. unexpected costs), limited brand recognition by customers, etc.
Difficult market situation. When trading of goods and services becomes difficult because of recession or lack of the market, individual businesses or industries will face difficulties, or even get out of business. So, survival during difficult times becomes a main objective.
Management mistakes. Managers who are decision makers in a business may make mistakes. Things that may led to a survival phase may include lack of decision-making experience, purchasing wrong resources, poor quality of workforce as a result of bad hiring decision or ineffective advertising.
Threat of a takeover. Survival may be an important objective, if a business is being threatened by a takeover from a larger more established business. The main objective for the management of the company will be to persuade the owners (shareholders) not to sell their shares to the person or company bidding for them.
Competition. Fierce competition from rivals resulting in falling demand for the products may also force the business into the survival mode.
Examples of the survival objective
1. Find first five customers in the first half of 2021.
2. Reduce losses to zero by the end of the 2021.
3. Minimize the excessive fixed costs to break even in 2021.
Once businesses become fairly established, they can focus on long-term objectives such as growth and profit maximization.
