- Survival – When a business is in its early stages then it will want to survive, it will shape its objectives to make trading easier and maximise profits. Another threat to a businesses survival is corporate takeover, to prevent this a business would have to reshape their objectives.
- Profit Maximisation – This is exactly as it sounds, for many reasons a business will need to maximise profits and to do this suitable objectives will have to be drawn up. Some business may choose to go for long term profit maximisation to ensure that they make lots of money and can therefore expand.
- Satisficing – This is an objective that maximises profit to the owners, it might not give the maximum profit that is possible to achieve.
- Growth – These objectives increase the growth of the business so that the workers, managers and directors can benefit.
- Promotion of image – Relationships with customers and employees is key in a modern business and so a company is ever vigilant of how it appears to these people. For a company o be better that the competition it is important that they have the correct image and a better one than the competition. Objectives can be shaped to develop good relations and treat employees well.
All of the things above help shape the objectives of a company and their direction in the market place. Stakeholders do have a large say in what happens within the company as far as things such as financial decisions and objectives. A company’s aims are just as important but these are just two of the factors that can govern what makes company policy. The size of the firm is also an important consideration, as this will govern things such as human and physical resources available to the company. The age of a business can greatly affect the direction of the company as older businesses are less likely to accept change and so may be slower at re-directing their efforts if the need arises. All of these changes are instigated by internal matters, company’s are also affected by external factors. Perhaps the biggest external factor is changing market trends. A sudden change in market trends can mean that the companies aims and objectives become obsolete and have to be re-drawn. This can be a big thing for a company to do and can lead to loss of jobs etc. A good example of this is the car industry where many jobs have been lost because market demand decreases.
Cornhill’s Mission Statement is:
“ Our mission is to grow our business profitably so that we are:
A leading player in our chosen markets by size, ranking, regard or influence.
A natural choice for customers and intermediaries- positively regarded, attractive and competitive/
A challenge to our competitors – creditable, effective and respected.”
If we look at these objectives they can be clearly seen as being SMART. The first objective is a measurable one and also one that can be achieved; it shows how Cornhill Direct is trying to promote its own image and enhance its market status. Cornhills other objectives are specific, wanting to become a household name and becoming a challenge to the competitors. Cornhills owners Allianz have influenced the first objective because Allianz aim to be at the top of the market in any division they own. Cornhill have also created some time-constrained objectives to try and achieve, they want to double in size by 2005. These time-constrained objectives allow the company to plan in the long term and develop changes in their strategies to compensate for changes in the environment around them, which may compromise the meeting of the business’ target.
Cornhill has these objectives due mainly to the market around them, the insurance business is a very competitive one and if a company can gain an edge over the competition then it is likely to succeed. Cornhill have used things such as direct marketing and e-commerce to gain this edge and maintain their objective of being one of the leading insurers. Also for a company in such a competitive market to survive it must set itself demanding objectives to ensure it works to its maximum efficiency. When it comes to analysing their performance, Cornhill use various qualitative and quantative methods to do so. Each division of the company have their own targets for sales and these are reviewed on a regular basis to ensure that new ideas and objectives are being fulfilled successfully. Also the company often have staff satisfaction surveys to make sure that their staff are happy and an opportunity for the staff to express their opinions and problems. This ensures that the staff can work in the best environment and they work as well as possible. Finally the company as a whole has phone targets, whereby the phones should be answered within an allotted time, these are carried out randomly and the operators are assessed.
Cornhill say they have a long-standing objective to look after the community around them and they want to create a safe & healthy workplace for their employees. Cornhill strive to use as much recycled material as possible and waste as little energy as they can in the day-to-day running of the company. They are aiming for a waste free business and with the advent of computers they are working on ways to reduce the amount of resources used. Cornhill are continually evaluating the effect of the business on the surrounding communities and they are trying to minimise the damage caused by the company by forming good relationships with the community.