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

Business Aims,Objectives & Organisation 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 Stakeholder’s needs Maximising sales and profits Growth of businesses Business Aims,Objectives & Organisation

Business Aims,Objectives & Organisation 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) Business Aims,Objectives & Organisation

Business Aims,Objectives & Organisation Activity Use these headings and draw up 2 lists of (1)Physical Goods and (2)Services, The text book referred to above is GCE AS level Double Award Applied Business Written by Dransfield & Needham and published by Heinemann Business Aims,Objectives & Organisation

Business Aims,Objectives & Organisation 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) Business Aims,Objectives & Organisation

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

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 Business Aims,Objectives & Organisation

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

Business Aims,Objectives & Organisation 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 Business Aims,Objectives & Organisation

Business Aims,Objectives & Organisation S-M-A-R-T Objectives SMART objectives are SPECIFIC – exact and precise MEASURABLE – it can be seen to be done ACHIEVABLE – it can be done REALISTIC – not a hopeless aim TIME-RELATED – can be done within a pre-determined period Business Aims,Objectives & Organisation

Business Aims,Objectives & Organisation 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 Business Aims,Objectives & Organisation

Business Aims,Objectives & Organisation 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) Business Aims,Objectives & Organisation

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

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

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 Business Aims,Objectives & Organisation

Business Aims,Objectives & Organisation 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 Business Aims,Objectives & Organisation

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

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 Stakeholder’s needs Maximising sales and profits Growth of businesses Business Aims,Objectives & Organisation