1.2 Setting Business Objectives 1 S TARTING A B USINESS 1.2 SETTING BUSINESS OBJECTIVES What do they want to achieve? A premier league football club A contestant on “The Weakest Link” A NHS hospital The RSPCA A mother elephant in Africa An amateur theatrical society A window cleaner Confused.com Subway Do they have just one objective or many? In teams take one of the above examples and list as many objectives as you can think of. Try and place these in order of importance

1.2 S ETTING BUSINESS OBJECTIVES  In this topic you will learn about  Types of business objectives  Purpose of setting objectives  Using business objectives to measure success  Influence of the stakeholder on business objectives 1.2 SETTING BUSINESS OBJECTIVES

B USINESS O BJECTIVES SETTING BUSINESS OBJECTIVES Down 1.Behaving in a manner that is morally correct (7) 2.If we use these sources of energy they will last for longer (11) 5. & 6. across If we provide a good product or service this should be achieved (8,12) Across 2. & 7 across Tesco has the biggest amongst supermarkets (6,5) 3. Getting bigger (6) 4. The money type not the religious follower (6) 6. See 5 down 8. Contestants on ‘the X factor’ fight for this (8)

T YPES OF BUSINESS OBJECTIVES  A business objective is a goal that a business wants to achieve  Business objectives will vary from one business to another e.g.  a new business may want to survive in its first year  a sandwich shop may want to gain more customers  A business might set different objectives for the short, medium and long term 1.2 SETTING BUSINESS OBJECTIVES What are your objectives for the short, medium and long term?

T YPES OF B USINESS OBJECTIVES  Survival  The ability of a business to continue to exist  Need enough money to pay expenses  Profit  To receive more money in sales than the costs  Growth  To expand, may be through more customers, more sales, more branches 1.2 SETTING BUSINESS OBJECTIVES Are there any businesses in your local area that have failed to survive? What do you think were the main causes of the closure?

T YPES OF B USINESS OBJECTIVES  Market Share  The percentage of the total market that one particular brand or business owns 1.2 SETTING BUSINESS OBJECTIVES How much do you know? Who are the leading 4 supermarkets in the UK by sales? What percentage do you think they each control? What supermarkets make up the rest of the market? What share of the market is owned by the combined discount stores Lidl, Aldi and Netto? Who is closest? In 2007 what do you think was the value of the UK grocery market?

T YPES OF B USINESS OBJECTIVES  Customer Satisfaction  A satisfied customer leaves happy and is more likely to return  Avoids negative publicity  Positive advertising through word of mouth  Helps achieve other objectives e.g. survival, profit and growth 1.2 SETTING BUSINESS OBJECTIVES Does the level of customer satisfaction effect the staff as well as the customer?

T YPES OF B USINESS OBJECTIVES  Ethical  To do the morally correct thing  Can help attract customers  Sustainable  Making use of renewable resources  Reducing waste  Using energy in a more efficient manner 1.2 SETTING BUSINESS OBJECTIVES Should businesses behave in an ethical manner? Should businesses have a responsibility to protect the environment?

T YPES OF OBJECTIVES  Objectives should be ‘SMART’  S _ _ _ _ _ _ _  M _ _ _ _ _ _ _ _ _  A _ _ _ _ _ _ _ _ _  R _ _ _ _ _ _ _ _  T _ _ _ _ 1.2 SETTING BUSINESS OBJECTIVES Your objective is to work out what SMART stands for without being hung!

T YPES OF BUSINESS OBJECTIVES  Primark – in your own words  Identify the range of objectives at Primark  Explain these in your own words 1.2 SETTING BUSINESS OBJECTIVES Primark in its own words Recap 1.1 What is a niche in a market? What is Primark’s niche?

P URPOSE OF SETTING OBJECTIVES  Setting targets that the business can work towards  These provide a clear focus for the business  Objectives may change as the business changes 1.2 SETTING BUSINESS OBJECTIVES What are your objectives in taking GCSEs? Do you understand why you have set objectives? Who has been involved in setting your objectives? What are the advantages to you of having objectives? How might your objectives change over the next 2 – 5 years?

U SING BUSINESS OBJECTIVES TO MEASURE SUCCESS  How can a firm use business objectives to measure success? 1.2 SETTING BUSINESS OBJECTIVES Business ObjectiveImportance? Survival Profit Growth Market share Customer satisfaction Ethical Sustainable Look at the list of business objectives on the left. Which one is the most important in measuring the success of a small business? Place a number from 1 to 7 next to the objective (1 = most important, 7 least important). How does each objective help to measure the success of the business?

B USINESS OBJECTIVES 1.2 SETTING BUSINESS OBJECTIVES Tea Time Treats Tessa is putting together a prospectus for potential franchisees of Tea Time Treats. Tim, her business adviser has suggested that she includes in it both her own business objectives and those a franchisee may expect to fulfil. Tim has also said that it is important to include in the prospectus that all ingredients used are sourced locally and of a high quality. For example Tessa buys only free range eggs from local farmers and uses only fruits in season from local growers. Recap tea time treats Question Time 1.What is meant by the term ‘business objective’?(2 marks) 2.Explain two advantages to Tessa of having both an ethical and sustainable objective.(6 marks) 3.Explain two other objectives a franchisee may have?(4 marks) 4.Explain two advantages to Tessa of setting business objectives. (4 marks)

B USINESS OBJECTIVES 1.2 SETTING BUSINESS OBJECTIVES Team Task Write a list of SMART objectives for Tessa

S AY WHAT YOU SEE 1.2 SETTING BUSINESS OBJECTIVES

I NFLUENCE OF THE S TAKEHOLDER ON B USINESS OBJECTIVES StakeholderStaffOwnerCompetitorsSuppliers Bank Manager Customers Local Community 1.2 SETTING BUSINESS OBJECTIVES A stakeholder is anyone that has an interest in a business What do you think the objective of each stakeholder is?

I NFLUENCE OF THE S TAKEHOLDER ON B USINESS OBJECTIVES 1.2 SETTING BUSINESS OBJECTIVES How do stakeholders influence a business?  Bank managers provide finance in the form of bank loans  Employees provide their services in return for income and job satisfaction  Communities expect a firm to create jobs and to behave responsibly  Suppliers provide goods and services in return for payment  Customers spend money in return for an appropriate quality of product Each stakeholder will clearly have an influence on the firm – whether it be providing finance, services or custom

I NFLUENCE OF THE S TAKEHOLDER ON B USINESS OBJECTIVES 1.2 SETTING BUSINESS OBJECTIVES  Who are the stakeholders in your school/college? Produce a spider diagram showing the stakeholders for your school/college. For each stakeholder briefly state why they have an influence on your school/college

2 M INUTE T EST  State 5 types of business objectives  What does SMART stand for?  Give 1 reason for setting objectives  What is meant by a stakeholder?  State 5 different stakeholders End