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

one
benefit STS might gain from its new mission statement. 
[4]
2.
a.
Explain what you understand by SMART objectives. 
[4]
b.
STS’s objectives are not completely SMART. Analyse 
two
problems that
might 
arise from this. 
[8]
3.
STS’s aim is ‘to maximise returns to shareholders through a strategy of
aggressive 
growth’. Using the data provided, evaluate the extent to
which they are being 
successful in achieving this objective. 
[8]

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Business organisation and environment
52 
1.3
Public sector or private sector businesses
State-owned organisations tend not to have pro
fi
t as a major objective. Quality of 
service targets are often set, however, such as the maximum days for a patient to wait 
for an operation. Even businesses earning revenue in the public sector, such as the 
postal service, may have among their objectives the target of maintaining services in 
non-pro
fi
table locations.
Well-established businesses
Newly formed businesses are likely to be driven by the desire to survive at all costs
– 
the failure rate of new 
fi
rms in the 
fi
rst year of operation is very high. Later, once well 
established, the business may pursue other objectives such as growth and pro
fi
t.
Changing business objectives
Businesses can change their corporate objectives over time. These changes will be in 
response to internal factors, such as resource constraints, or external factors, such as 
changes in the social and economic environment.
Some of the most signi
fi
cant reasons for businesses changing their objectives include the 
following:
• A business may have satis
fi
ed the survival objective by operating for several years and 
now the owners wish to pursue objectives of growth or increased pro
fi
t. The internal 
resources of the business might have increased which will allow the objective of 
growth to be realistically established.
• An important senior manager responsible for international expansion might leave the 
business, which leads to focusing on growing the business in domestic markets until an 
e
ff
ective replacement can be found.
• The external competitive and economic environment may change. The entry into 
the market of a powerful rival or an economic recession may lead a 
fi
rm to switch 
from growth to survival as its main aim. The UK airline British Airways (BA) has 
responded to the dual impact of increased low-fare competition and the recession by 
focusing less on its objectives to increase business-class and 
fi
rst-class market share and 
more on cost-cutting and low fares. This has led to serious disputes with trade unions 
representing BA cabin sta
ff
.
• A short-term objective of growth in sales or market share might be replaced by a 
longer-term objective of maximising pro
fi
ts from the higher level of sales.
Business objectives need to be 
fl
exible enough to be adapted to re
fl
ect internal and 
external changes, but they should not be changed too dramatically or frequently as this 
may result in the loss of many of the bene
fi
ts of setting SMART targets, including a loss 
of focus, sense of direction and speci
fi
c measures to judge present performance. Before 
making a signi
fi
cant change to objectives, senior managers need to
consider:
• Is the internal or external change signi
fi
cant and long-lasting enough to make a 
change in objectives necessary?
• What would be the risks of not adapting objectives to meet the new situation?
• What would be the cost and other consequences of new business objectives for the 
business and its
sta
ff
?
• How can changed objectives – and the strategies needed to achieve them – be 
e
ff
ectively managed within the business?

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Organisational objectives
53