L2 Business Enterprise/ICT Unit 2 Business Organisations Setting Aims and Objectives

Aims and Objectives To understand a businesses situation and needs. To be able to decide set aims and objectives for a business based on its situation and needs.

Focus of Aims and Objectives for a Business Survival = Keep on trading Break even = costs and income the same Diversifying = moving into other markets/ Service Provision Consolidation = merging Expansion = growing the business Market Share Sales Profit maximisation

Survival A business needs to survive. 51% of new businesses fail in a year. Source Many more fail between years 1-5 Reasons Come up with Aim to help survival

Break even When costs and income are the same Realistically can be long process Aim for the business to break even by 2014 Need Customers Marketing strategy Price products/services correctly Know market Be lucky Work ON business Come up with an Aim for breaking even

Diversifying Moving into new markets Improving current service provision Aim ‘To diversify and increase product range from telephones to laptops and consoles within 3 months’ Can be a survival tactic Can be expansion tactic Tesco’s Groceries – Clothes – Bank – insurance Phone – Internet shopping Tesco’s now going into Asia in big way China, Thailand An Aim for diversifying

Consolidation Forming relationships with other businesses Aim to increase our market share by 30% to 60% by joining with….. Next year Can be partnership or buyout T-Mobile and Orange Lowers costs (operating costs) Share customers An Aim for Consolidation

Expansion Groupon worlds fastest grown company* Launched 2008 Group Discount Floated on stock exchange 2010 Gone global operates in 44 countries In trouble now though… An Aim for Expansion

Market Share Aim to increase Market Share Aim to increase our market share from 20% to 25% in 2013 Makes you safer if you increase it Take customers from competitors Create new customers An Aim for increasing market share

Sales Increasing sales Can be specific – “Need to sell 10% more Sony TV’s this month than last month” Can be general – “Need to increase sales by 10% throughout the store” Has many benefits Confidence for employees/owners Increases revenue/profit Scares competition

Profit Maximisation Make the most of what you have Extracting as much money as you can from products/services Focus on individual deals rather than bulk (sales) Focus on Bulk orders (lowering costs) Lease underutilized resources Make cash flow work

Class Exercise In groups of three, come up with 1 Aim and 2 Objectives for each of the business goals to the right They are for a business that has not began trading yet. You need good reasons/justifications for your choices. Make them SMART! Specific Measurable Achievable Realistic Time bound Survival = Keep on trading Break even = costs and income the same Diversifying = moving into other markets/ Service Provision Consolidation = merging Expansion = growing the business Market Share = getting bigger share of the market Sales = increasing numbers Profit maximisation = Getting the most out of your resources