Companies are not created to fill a vacuum. They are established to fulfil a purpose. A company may have at least one business objective. These can be subdivided into primary and secondary. Primary objectives are why a business was established in the first instance. For secondary, it depends on the goals of the entity.
1. Primary business objective
This is the profitability objective. Businesses are established for the main aim of making a profit. Shareholders want to know what the entity earns for better decision-making. Profitability of a business shows that the owners/investors have a positive return on their investments.
In addition, profitability ensures the growth and survival of the entity. Entities that earn profit can use part of those earnings to reinvest in the business for growth and development.
2. Secondary business activities
The company's directors have these secondary objectives:
Business Growth
Entities may have the goal of becoming the market leader by increasing their market share. Others may want to be internationally recognized. Many startups in Nigeria have expanded to other African countries, Europe, Asia, and the United States of America. Growth objective requires large capital expenditure with the suspension of positive return on investment to shareholders.
Employee satisfaction
To ensure a quality workplace and to reduce labor turnover, companies provide satisfaction to their employees. This is done through welfare packages, a good working environment, career growth, and training.
Customer Satisfaction
A business provides goods or services that meet customers' requirements. One reason why this business objective is important is that the way customers and consumers of a company's products and services have a relationship to its future survival. When clients have negative views about a business, if this is not dealt with on time can bring the business down.
Innovation
Companies spend money on research and development. For a technology company, this cannot be overhyped because their success depends on their continuous innovation. Therefore, a company director may have innovation as part of their secondary business objectives. More so, such innovation has an impact on the future success of the organisation.
ESG compliance
The primary objective has resulted in the degradation of the environment. As a result, the government and key stakeholders of ESG have pushed for environmental, social, and governance compliance. With these and in recent times, many investors will not fund a company if they are not ESG compliant. Therefore, directors of large firms have included a sustainability report in addition to their annual financial report.
Finally, a company can apply all primary and secondary objectives. Others may pursue one or two business objectives, then move to others after achieving them. In all, when a business management has a goal, they will plan on how to achieve it. However, where there is none, the Will will not be there.
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