What is a Successful Business? UNIT 2.5 What is a Successful Business?

Measurements of Success Different types of business will have different ways of measuring success – could be: Achieving profits Achieving the aims of the organisation Survival of the business To be independent To improve product/service Achieving good sales figures Having good relationships with stakeholders Leading the way with innovation Achieving growth Having a large market share To provide employment

Advanced Objectives Once an organisation has achieved some measure of success, it may have additional, advanced objectives eg: to sustain growth To increase market share To have an easily-recognisable brand

Types of Organisation Sole Trader Partnership Private limited company Public limited company Charity Co-operative Franchise Voluntary organisation

Measuring Success This will vary depending on the type of organisation For example: A profit-making business might use its actual value of profit and compare it with other years or other similar businesses A charity might measure its success by the amount of aid given to its chosen cause (eg Oxfam may decide it is successful if it can provide enough aid to famine-hit areas) A public sector organisation may measure its success on the way in which it has used its funding (eg a state-run nursery may decide it has been successful if it provides adequate care for a large number of children)

Stakeholders These are the people/organisations who invest or have an interest in an organisation Many different types of stakeholder depending on the type of organisation For example, owners, shareholders, managers/directors, employees, debtors, creditors, customers, Government (tax and law), suppliers, local community, trade unions, EU

Conflicting Interests of Stakeholders Stakeholders in an organisation have different expectations Customers want the best prices with good quality products Shareholders want large profits, stability of the business, increasing share value Employees want job security and promotion prospects Local community wants provision of jobs, clean/safe environment Suppliers want prompt payment, regular orders

Shareholders : Have an interest in how their shares are performing and therefore an interest in how the business is performing Private limited company shareholders can be more flexible and supportive as they are usually family, employees or friends want the firm to do well in the long term Public limited company shareholders are usually more detached from the business and are only interested in share prices and the dividends they will receive.