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Business Aims,Objectives & Organisation1 Investigating people at work Business Aims, Objectives and Organisation (1)

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1 Business Aims,Objectives & Organisation1 Investigating people at work Business Aims, Objectives and Organisation (1)

2 Business Aims,Objectives & Organisation 2 Lesson Objectives In this lesson we will look at:- Profit-making and Not-for-profit businesses Objectives of a business, including Aims & objectives Mission statements SMART objectives Survival of businesses Stakeholders needs Maximising sales and profits Growth of businesses

3 Business Aims,Objectives & Organisation 3 Basic definitions Business - decision making unit created to make goods/provide services Goods – things people buy to make better off Service – an intangible purchase Product – a benefit we can see or touch (also used for intangibles)

4 Business Aims,Objectives & Organisation 4 Activity Use these headings and draw up 2 lists of (1)Physical Goods and (2)Services,

5 Business Aims,Objectives & Organisation 5 For Profit Businesses Most of these fall into one of the following categories:- Sole trader (One owner) Partnerships Private limited companies Public limited companies (plcs)

6 Business Aims,Objectives & Organisation 6 Where does the profit go? Sole trader – as income to the owner Partnership - divided between partners equally unless Partnership Agreement states otherwise Private Cos/plcs - as dividend to shareholders

7 Business Aims,Objectives & Organisation 7 Not-for-profit organisations These fall into two main types:- Charities – set up for a particular purpose. Example is Macmillan Cancer Nurses. Surplus after costs not profits as such but retained for future use. Voluntary organisations – mainly people who work unpaid for the benefit of needy. NOTE – PEOPLE WHO WORK FOR A CHARITY ARE SOMETIMES PAID NOTE – PEOPLE WHO WORK FOR A CHARITY ARE SOMETIMES PAID

8 Business Aims,Objectives & Organisation 8 Aims and Objectives AIMS AIMS are stated in general terms eg a travel agents might simply be To sell holidays and make a profit BPs aim might be to prospect for oil, refine it and sell the products at a profit OBJECTIVES OBJECTIVES are sub-components of aims and can often be quantified eg An airlines objective may be to carry 2million passengers a year by a given date in the future

9 Business Aims,Objectives & Organisation 9 Mission Statements Often used to set out general aim or purpose of organisation Can give employees clear lead for their role and tell outsiders what organisation stands for AIM MISSION STATEMENT BUSINESS PLAN

10 Business Aims,Objectives & Organisation 10 S-M-A-R-T Objectives SMART SMART objectives are S S PECIFIC – exact and precise M M EASURABLE – it can be seen to be done A A CHIEVABLE – it can be done R R EALISTIC – not a hopeless aim T T IME-RELATED – can be done within a pre- determined period

11 Business Aims,Objectives & Organisation 11 Specific Objectives A business may have more exact objectives that are specific to its situation. These could include:- Survival Meeting stakeholder needs Maximising sales revenue Maximising profit Growth

12 Business Aims,Objectives & Organisation 12 Survival Any size business has on-going task in keeping going. Threats include:- Change in fashion New technology Competition Changes in customer habits (out of town shopping)

13 Business Aims,Objectives & Organisation 13 Meeting stakeholder needs Business must consider needs of stakeholders, who include:- Shareholders (owners for small businesses) Employees Customers Government Local community Other businesses Suppliers

14 Business Aims,Objectives & Organisation 14 Maximising sales revenue Businesses aim to increase turnover as higher profits should follow larger business = greater economies of scale =more profit more profit

15 Business Aims,Objectives & Organisation 15 Maximising profits/surplus To ensure long-term profits companies may have to sacrifice some short term gains to ensure market leadership Examples of this include:- Purchase of new plant & machinery from current profits to maximise future efficiency and thus profitability Lowering prices to gain market share then gaining from increased overall customer spend

16 Business Aims,Objectives & Organisation 16 Growth Businesses grow INTERNALLY (or, Organically) by expanding their market Widening their range of products and services By gaining more sales Businesses grow EXTERNALLY By merging with another business or company By taking over another company

17 Business Aims,Objectives & Organisation 17 Example of Growth Ryanair–a very successful airline grew by Developing new routes Buying up rival airlines Heavy price cutting

18 Business Aims,Objectives & Organisation 18 Lesson Objectives Revisited In this lesson we looked at:- Profit-making and Not-for-profit businesses Objectives of a business, including Aims & objectives Mission statements SMART objectives Survival of businesses Stakeholders needs Maximising sales and profits Growth of businesses


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