Organisational objectives 3 On completing this chapter you should be able to: Know and understand

•
To be the lowest cost, highest quality producer in the household products
industry
•
To achieve a 15% average annual growth in sales, profit and earnings per
share
20 marks, 40 minutes
1.
Explain what is meant by the term ‘SMART objectives’. 
[4]
2.
To what extent are the corporate objectives for Domestic Detergents SMART 
objectives? 
[8]
3.
Discuss the benefits and limitations to Domestic Detergents of setting specific 
and
time-limited objectives. 
[8]

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Business organisation and environment
42 
1.3
• High short-term pro
fi
ts may lead competitors to enter the market.
• Many businesses seek to maximise sales in order to secure the greatest market share 
possible, rather than maximise pro
fi
ts. The business would expect to make a target rate 
of pro
fi
t from these sales.
• Owners of smaller businesses may be more concerned with issues of independence 
and keeping control – these may be of more importance than making higher pro
fi
ts.
• Most business analysts assess business performance through return on capital 
employed
– the rate of pro
fi
t returned on each dollar invested in the business – rather 
than through total pro
fi
t.
• Pro
fi
t maximisation may well be the preferred objective of the owners/shareholders, 
but other stakeholders will give priority to other issues. Managers cannot ignore 
these. Hence, the growing concern over job security for the workforce and the 
environmental concerns of local residents may force pro
fi
table business decisions to be 
modi
fi
ed, giving lower pro
fi
t levels.
• In practice, it is very di
ffi
cult to assess whether the point of pro
fi
t maximisation has 
been reached, and constant changes to prices or output to attempt to achieve it may 
well lead to negative consumer reactions.