Business Objectives in the Private and Public Sector (Cambridge International AS Business)
Exam board Cambridge International · ASUpdated 2025-06-09
Private Sector Business Objectives
The objectives of private sector businesses
- Private sector businesses usually aim for commercial success
- In order to achieve this, they commonly pursue a limited range of objectives
Common objectives in the private sector
| Objective | Explanation |
|---|---|
| Profit maximisation | - Most firms have the rational strategic objective of profit maximisation - Profit = Total Revenue (TR) - Total Costs (TC) - To maximise profits, firms can either increase their sales revenue or decrease their costs - Firms continuously analyse their costs to see if they can reduce them so that profit can be maximised |
| Growth | - Firms with a growth objective often focus on increasing their sales revenue or market share - Firms will also maximise revenue in order to increase output and benefit from economies of scale - A growing firm is less likely to fail |
| Ethics and social responsibility | - An increasing number of firms are launching with ethical or socially responsible objectives - These typically include a focus on climate action & addressing poverty or inequality - They still require profit to survive, but will accept less than if they were profit-maximising as long as they are meeting their social objective |
| Survival | - Challenging market conditions and difficult periods of change or crisis can require a focus on keeping the business going - Survival is also a common strategic objective for new business start-ups and careful cash-flow management is likely to be at its core - The recent pandemic required many businesses to adopt a short-term survival objective, with many taking advantage of government support to enable them to continue trading and recover |
| Protecting shareholder value | - A common objective for public limited companies where the value of shares and dividends payable to shareholders are important metrics - Strategic objectives may seek to protect shareholder value above all else - Having this objective will help to encourage new investors and satisfy existing shareholders |
Public Sector Objectives
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The public sector refers to organisations that are owned or controlled by the government
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The main goal of organisations in the public sector is usually to provide services such as education, healthcare or emergency services that may not be provided by private sector businesses
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Public sector organisations tend to be focused on service objectives, including
- The provision of reliable and efficient services at a reasonable cost
- Meeting performance targets set by the government
- Encouraging social and economic development
- Creating jobs or increasing employment levels
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Public sector organisations may also set financial objectives to provide a return to the government to reinvest
- Although not the primary aim, having a positive financial return in the public sector is generally welcomed by governments
Social Enterprise Objectives
The objectives of social enterprises
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Social enterprises operate in the private sector but do not have making a profit as their primary focus
- They seek to make a profit in order to spend the money on achieving their social objectives
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Objectives may include:
- Social: to provide jobs and support for disadvantaged groups in society, such as the disabled or homeless
- Environmental: to protect the environment
- Ethical: to operate the business in a responsible way
- Financial: to make a profit to invest back into the social enterprise to expand the social work that it performs
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Butterfly Books is a social enterprise that publishes children’s educational books in the UK
- Their aim is to 'work to educate, inspire and entertain children, aiming to change future generations by reducing gender bias in job roles'
- A recent book entitled 'My Mummy is an Engineer' challenges gender stereotypes
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