2 Business objectives
Business activity
Business : an organization that provides goods and services. It has to satisfy
people’s needs and wants.
Stakeholders : individual or group with an interest in the operation of a business e.g.
owners, customers, employees, suppliers, local community, government
Business objectives
- focus, know what to aim for
- Employees work towards the same goal
- A measure of success
Financial aims and objectives
(Goals or target set by a business)
Survival: first start business may be vulnerable and the owner may lack experiences,
therefore, survival is vital for them.
Profit: Most owners want financial returns to keep a company going
Sales: large volume of sales - enjoy lower costs, larger market share, higher public
profile, generate more wealth for the owners
Increase market share: businesses with larger market share may be able to
dominate the market - charge higher prices, easier to launch new products, higher
profile in the market
Financial security: make enough profit to give them financial security - don’t want to
take extra responsibility of expanding their business, owners can spend more time
on their interests
Non-financial aims and objectives
Social objective: designed to improve human or environmental well-being like
reducing response time for emergency service or increasing rate of recycling.
Personal satisfactory: owners feel happier, more satisfied with their work,
environment that when working for an employer
Challenge: some people are motivated by challenges so they set up a business
Independence and control: some want to be in control and they are driven by their
desire to be independence to take control of their own future, freedom and making all
the decisions
Why business aims and objectives changes as businesses evolve
Market condition: when market conditions change, it may be necessary to set new
objectives. Ex: changing from a profit seeking business to a survival one when
trading becomes difficult
Technology: When more automation are introduced in production a business may
change its objective to sales growth - to lower the costs in order to exploit economies
of scale / win a larger share of the market after introducing online selling technology
, Performance: A business that has been growing sales may want to focus more on
profitability as the sales growth has been achieved by lowering the prices
Legislation: many businesses has become more socially responsible due to new
legislations
Internal reasons: a business may change ownership so the objectives may changes
3,4,5 Types of organisation
Entrepreneur: people who set up business
Sole trader- business owned by a single person
Advantage Disadvantage
Owner keeps all the profit Have unlimited liability (if fails can lose
more money than invested)
Independent- owner has complete May struggle to raise finance-
control considered too risky to lend money
No legal requirements long hours and hard work
flexibility- can adapt to change quickly too small to exploit economies of scale
Partnership- business owned by between 2 and 20 people
Advantage Disadvantage
Easy to set up - no legal formalities Unlimited liability
Partners can specialise in different area Profit has to be shared
of expertise
more capital can be raised with more partners decisions are legally binding
owners (by law)
Limited companies - business organisation that have a separate legal identity from
that of their owners
Formation
Memorandum of Association (name of company,address,objectives,nature of its
activity,amount of capital, no. of shares) & Articles of Association (rights of
shareholders,length time of directors) are needed to get a certificate of incorporation
(allow it to trade as a limited company)
Business activity
Business : an organization that provides goods and services. It has to satisfy
people’s needs and wants.
Stakeholders : individual or group with an interest in the operation of a business e.g.
owners, customers, employees, suppliers, local community, government
Business objectives
- focus, know what to aim for
- Employees work towards the same goal
- A measure of success
Financial aims and objectives
(Goals or target set by a business)
Survival: first start business may be vulnerable and the owner may lack experiences,
therefore, survival is vital for them.
Profit: Most owners want financial returns to keep a company going
Sales: large volume of sales - enjoy lower costs, larger market share, higher public
profile, generate more wealth for the owners
Increase market share: businesses with larger market share may be able to
dominate the market - charge higher prices, easier to launch new products, higher
profile in the market
Financial security: make enough profit to give them financial security - don’t want to
take extra responsibility of expanding their business, owners can spend more time
on their interests
Non-financial aims and objectives
Social objective: designed to improve human or environmental well-being like
reducing response time for emergency service or increasing rate of recycling.
Personal satisfactory: owners feel happier, more satisfied with their work,
environment that when working for an employer
Challenge: some people are motivated by challenges so they set up a business
Independence and control: some want to be in control and they are driven by their
desire to be independence to take control of their own future, freedom and making all
the decisions
Why business aims and objectives changes as businesses evolve
Market condition: when market conditions change, it may be necessary to set new
objectives. Ex: changing from a profit seeking business to a survival one when
trading becomes difficult
Technology: When more automation are introduced in production a business may
change its objective to sales growth - to lower the costs in order to exploit economies
of scale / win a larger share of the market after introducing online selling technology
, Performance: A business that has been growing sales may want to focus more on
profitability as the sales growth has been achieved by lowering the prices
Legislation: many businesses has become more socially responsible due to new
legislations
Internal reasons: a business may change ownership so the objectives may changes
3,4,5 Types of organisation
Entrepreneur: people who set up business
Sole trader- business owned by a single person
Advantage Disadvantage
Owner keeps all the profit Have unlimited liability (if fails can lose
more money than invested)
Independent- owner has complete May struggle to raise finance-
control considered too risky to lend money
No legal requirements long hours and hard work
flexibility- can adapt to change quickly too small to exploit economies of scale
Partnership- business owned by between 2 and 20 people
Advantage Disadvantage
Easy to set up - no legal formalities Unlimited liability
Partners can specialise in different area Profit has to be shared
of expertise
more capital can be raised with more partners decisions are legally binding
owners (by law)
Limited companies - business organisation that have a separate legal identity from
that of their owners
Formation
Memorandum of Association (name of company,address,objectives,nature of its
activity,amount of capital, no. of shares) & Articles of Association (rights of
shareholders,length time of directors) are needed to get a certificate of incorporation
(allow it to trade as a limited company)
