1. Objectives
Understanding Business Higher Business Management

2. Objectives are long term goals which businesses aim to achieve
Objectives allow employees, customers and suppliers to know what the business is working towards

3. Business Objectives Profit Maximisation Survival (Break Even) Growth
Social Responsibility
Satisficing – settling for an easy option
Managerial Objectives

4. Corporate Social Responsibility
Being responsible in business is very important
Businesses that are seen to be irresponsible tend to gain a bad reputation and can suffer from decreased sales as a result
The Body Shop does not test on animals
M&S sell a number of fair trade products
McDonalds place bins outside their restaurants
Car manufacturing companies are now trying to reduce their fuel emissions

5. Profit Maximisation – what are the costs?
Making the maximum amount of profit is a main aim for many organisations.
There are only 2 ways to maximise profit:
Increase sales/selling price
Reduce costs
\\Stirling-bdc5\DVD (F)\Information Technology\Business Education\Blood Sweat Lux - let me know if you want the video and I will try and send it

6. 22/02/2019
Survival
Businesses exist to make a profit, but for some, simply surviving is more important.

7. Managerial Objectives
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Managerial Objectives
Large organisations
Many managers
Some managers may choose to pursue their own aims
This might be to increase their own salary or promotion opportunities
Improving their own status
Businesses can benefit if the manager increases sales/profit
Teacher Note
Go through the aims, at this point pupils should be able to provide answers.

8. 22/02/2019
Satisficing
To ‘satisfy’: to aim for a satisfactory result, rather than an exceptional one
To make enough profit to keep shareholders/owners happy
NHS good example – they will aim to stay within budget, not to make drastic cuts
Teacher Note
Go through the aims, at this point pupils should be able to provide answers.

9. Business Growth Why do businesses grow?
To avoid being a takeover target
To reduce the risk of business failure
To become the market leader
To increase profits
To remove a competitor
To be able to take advantage of economies of scale

10. Internal Organic Growth
Open new branches
Develop new products
Advertise to increase sales
Hire additional staff

11. Questions - 1 Why is it important for a Business to have objectives?
List 6 objectives a business may have.
How can Social Responsibility be in conflict with Profit Maximisation?
Why does a business want to grow?

12. Key Terms – Methods of Growth
Merger
Takeover
De-Merger
Horizontal integration
Vertical integration
Conglomerate integration (Diversification)
Divestment
Outsourcing
Franchising
Video icon links to BBC News video – The secrets to successful merger (

13. This is when one firm combines with another
Merger
This is when one firm combines with another
This didn’t happen – but it nearly did!

14. Merger
This didn’t happen – but it nearly did!

15. Takeover (Acquisition)
This is when one firm takes control of another – usually a larger business taking over a smaller one.
Image is a link to Guardian news site - Coca Cola owning 90% of Innocent Smoothies

16. Takeover
Image is a link to Guardian news site - Coca Cola owning 90% of Innocent Smoothies

17. Vertical Integration
Backward Vertical Integration occurs when a business takes over a supplier
Guarantees stock
Cheaper stock

18. Vertical Integration

19. Vertical Integration
Forward Vertical Integration occurs when a business takes over a customer
Control pricing
Control distribution
Disney made films/products (Secondary) then decided to sell them directly rather than through other stores (Tertiary)

20. Diversification – Conglomerate Integration
This is when a business expands into markets different from its core activity
2009
1986
2004
Mackie’s and Taypack Joint Venture in 2009

21. Questions - 1 What is the difference between a Merger and a Takeover?
Growth includes Vertical Integration. What is the difference between Horizontal and Vertical Integration?
What is Diversification?

22. Your Task
Try to find examples of the various types of Growth on your worksheet.
Look at Proctor & Gamble’s website.

23. Divestment
This is when a firm sells its business assets or subsidiary companies
Focus on core activity
Obtain funds
Business may sell for more in ‘chunks’
Remove underperformance

24. Recruitment of new staff
Outsourcing
Core Activity
Catering
Cleaning
Accounts
Recruitment of new staff
Outsourcing is when an organisation contracts another to do work for them

25. Outsourcing ADVANTAGES
Reduces cost of employing staff for non-core activities
Saves cost of specialist equipment
Allows firm to concentrate on their core activity
Specialist firm may produce goods at a lower cost
Specialist firm may have knowledge and skills to complete the job to a higher quality

26. Outsourcing DISADVANTAGES Confidentiality issues May be very expensive
The organisation will have reduced control
Firm may take a long time to complete the job
May involve redundancies
Communication problems may mean the job is not of a suitable standard

27. Questions – 2
What is Divestment?
What is meant by Outsourcing?

28. Key Terms Merger Take Over Horizontal integration Vertical integration
Conglomerate integration (Diversification)
Divestment
Outsourcing
Franchising
Download and read the Growth Key Terms document from Edmodo
Using the links, or your own, list as many examples of each key term as you can
Be prepared to discuss the key terms and examples with others

29. Improve quality of goods and services
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Private Sector
The Private Sector aims:
To maximise profits
To expand the business
Survive (break even)
Improve quality of goods and services

30. To provide the highest quality of service to everyone in a country
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Public Sector
The Public Sector aims:
To provide the highest quality of service to everyone in a country
To make good use of taxpayers’ money when providing the services an area needs

31. Third Sector To raise awareness of good causes
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Third Sector
The Voluntary Sector aim:
To provide support for worthy causes, like homelessness, medicine, disability etc
To raise awareness of good causes
To provide the best service possible

32. Explain why a Private Limited Company, like Bupa healthcare, want to ensure it is providing a quality service?
(3 marks)
Compare the objectives of a private sector organisation with those of a public sector organisation.
(4 marks)

35. Explain why a Private Limited Company, like Bupa healthcare, want to ensure it is providing a quality service?
(3 marks)
The better the service, the (higher the price Bupa can charge. This may lead to more income and therefore profits).
Increase profits can be (invested into the business to further improve their services. For example, purchasing newer equipment, employing more staff, paying for staff training).
A better service means (greater customer satisfaction. This can improve the reputation of the company, which can lead to more customer loyalty).
The better the service, the higher the price Bupa can charge. This will lead to more income and therefore profits.
Increase profits can be invested into the business to further improve their services. For example, purchasing newer equipment, employing more staff, paying for staff training.
A better service means greater customer satisfaction. This can improve the reputation of the company, which can lead to more customer loyalty. 3

36. Compare the objectives of a private sector organisation with those of a public sector organisation.
(4 marks)
Private sector organisations’ objectives will focus on profit maximisation whereas public sector will require to operate within a specific budget
Private sector will focus on sales maximisation but public sector organisations will focus on provision of a specific product or service
Private sector organisations will be responsive to shareholders’ opinions however public sector will have local or national government priorities and objectives
Both will look to provide a quality service to ensure customers are satisfied 4

37. Type of Business Primary Objective Secondary
Private Limited Company
Survival
Profit
Maximisation
Public Limited Company
Growth
Franchise
Multinational
Government/Local Authority
Service Provision
Social
Responsibility
Public Corporations
Charity