Understanding Business Objectives: Primary vs. Secondary
Business Objectives
It is important to understand how business objectives ‘fit in’ with business aims and strategies.
- An aim states what you want.
- An objective sets out what you need to have achieved to get what you want.
- A strategy is a course of action which enables you to meet your objectives.
In order for objectives to be effective, they must:
- Provide detail about what specifically needs to be achieved (often in a quantitative form).
- Have a time limit by when they need to have been achieved.
- State the necessary resources that they require in order to be met.
Setting clearly defined and realistic objectives will enable many employees to understand exactly what their job entails. Achieving clearly stated objectives might be linked to bonus payments, which can easily act as an incentive and motivator to employees.
Primary and Secondary Objectives
A primary objective is an ultimate long-term goal of the business (e.g., survival, profit maximization, diversification, and growth). They are often referred to as strategic objectives.
A secondary objective is a day-to-day objective, and it makes a direct contribution to meeting the primary objectives (e.g., increase sales by 5% each year, keep labor turnover at less than 4%). They are often referred to as tactical objectives.
Private and Public Sector Objectives
Private Sector
Private sector objectives will often differ considerably from objectives set in the public sector. Profit maximization is often quoted as the overriding objective for businesses in the private sector. This will involve trying to produce at the point where there is the maximum difference between the firm’s total revenue and its total cost, resulting in large dividend payments for the shareholders.
Other objectives include:
- Maximize sales (or sales revenue) and so increase their market share in order to gain a competitive advantage.
- Improve their image and to appear more socially responsible and environmentally friendly. This is often achieved through strategies of recycling materials, sponsoring local events, and strictly adhering to all employee legislation (e.g., pay levels, Health & Safety, discrimination, etc.).
Public Sector
Public sector objectives have, traditionally, been centered around providing a public service, rather than making a profit. This regularly led to loss-making organizations being subsidized by the government, and complacency crept in with regards to customer service, quality levels, and response times.
Successful Entrepreneurs
Successful entrepreneurs are:
- Passionate about their product or service and about getting things right for the customer.
- Visionary – they have faith in what they are trying to do. They tend to not get too bogged down in the fine detail of day-to-day business.
- Energetic and driven – prepared to work consistently long hours, especially in the early stages.
- Self-starting and decisive – they don’t wait for others to take decisions. Entrepreneurs tend to take the initiative, spotting opportunities early and taking decisions quickly.
- Calculated risk-takers – not reckless; they are prepared to take a risk in order to maximize the rewards.
- Multitaskers – able to take on more than one role (product development, selling, recruitment).
- Resilient and determined – able to handle problems and overcome hurdles. Setting up a business is difficult and time-consuming.
- Focused – sets clear goals and self-imposed high standards.
- Results-orientated – take pleasure from achieving targets and setting the bar higher.
- Leaders – an entrepreneur leads his or her own business. As the business develops, the skills of leading others become even more important.