Business Objective

A company entering the market with a goal to do business shall have the following objectives:

Maximizing the returns on stockholders capital (wealth maximization) & and;
Profit Maximization

Unlike traditional business theories where maximum importance was given to profit maximization, modern theories lays down facts stressing on the maximization of wealth of its stock holders. Which means, maximizing the price of the stock/shares.

Profit maximization is a short term goal mainly for a period of one year or less. A company can maximize its short term profits at the expense of its long term wealth maximization. Stock holders wealth maximization is along term goal as stockholders are investing in a company expecting good-future-returns. Wealth maximization is preferable because it considers (1) wealth for long term, (2) risks, (3) stockholders returns and timing of the returns. Timing of the returns is important, as earlier the return is received, the better. A quick-positive return reduces the risk involved in the investment due to time factor. Also, if you have quick cash in hand you can reinvest the same.

When we are discussing long and short term business objectives, we must keep in mind that very often profit maximization and wealth maximization are conflicting objectives. It is very important for an entrepreneur to decide that what is his priority, longer term business or short term business. Very often you will find business starting off very well but ultimately going down to competition. They never invest in modernization and expansion of their business process. Hence better companies with good technology took over it. A costly investment may create losses in short term but yield substantial profits in long run. A company who wants to show short term profits may continuously postpone its capital repairs or equipment replacement. These postponements will certainly hurt the long term profitability. As an investor, important is to analyze a companies business objective and find out if it is focusing more on short term and long term growth.

The biggest obstacle in the way of long term wealth maximization is our thought process. And if you have overcome your mind then the second obstacle you will face is Financial Risk linked with any investment. Risk refers to the variability of expected returns (sales, earnings etc) and its profitability. Hence risk analysis is very important. Risk analysis is a process if measuring and analyzing the risk associated with financial and investment decisions. It is important to consider risk in making capital investment decisions because of the large amount of capital involved and also because of long term nature of the investment (time factor). Compare rate of return with amount of risk involved. Investor agreeing to take risk must be rewarded with good returns and vise versa. Management of Risk and returns is a key to create a long term wealth Maximization.

Aligning Channel Program Goals to Overall Business Objectives

Like a good spring cleaning, an economic downturn presents an excellent opportunity to thoroughly reassess and, if necessary, retool existing channel programs. But be careful! Unlike sorting through items in your basement or garage and placing them in junk or "keeper" piles, judgment calls regarding channel programs and partnerships are more complex than the question "Should I Stay or Should I Go?" posed by The Clash in a popular 1980s tune.

Underperforming distribution channels are a major source of frustration, even though lagging sales during difficult times are slightly easier to understand (but not accept). Before grading your partners' performance, and certainly before you recklessly wield your red pen signifying their failure, take a deep breath and ask yourself the first of many questions: "What was I hoping to achieve through this channel program?"

While the answer(s) may be highly predictable,-such as, attaining steady incremental revenue, increasing geographic coverage, reaching new groups of end users, or simply achieving greater market coverage without hiring additional internal staff-these objective are essential elements to an effective assessment and possible retooling of your channel program.

Don't stop there. You may need to convene an all-inclusive meeting of the minds, encouraging open and frank discussion among the top executives and sales personnel from your own company and your channel partners. Just as importantly, you must poll a full spectrum of end-users, from your best, longest standing customers to fledgling buyers who require nurturing to grow.

Only after everybody weighs in will you be able to accurately and objectively assess original and existing business objectives and determine whether your channel program needs to change-and how. In addition to synergies with your overall business objectives, ask yourself and your partners the following:

o What is the justification for your existing channel program? Has it needlessly deviated from its original intention or goal? Or have changes in your business or the overall economy dictated change?

o Are effective yardsticks in place to gauge your program's success? What changes must you make to achieve more meaningful and accurate measurement?

o Apart from increased product and service sales, what behaviors are you trying to inspire among your channel partners? Are the carrots you provide enticing enough? Or are they snack-sized?

o Is your product and service suite updated and in demand?

o Do you have a channel program execution strategy firmly tied to your overall business objectives?

There's no question your channel program and your partners are the keys to your organization's success. Your encouragement of an open, all-partner dialogue will clear any misconceptions or misunderstandings, providing a level of satisfaction and mutual benefit that far outweigh the temporary good feelings evoked by an uncluttered garage or basement.