Transcript Aims and Objectives - Sidney Stringer Academy

Aims and Objectives
OCR National
Business Studies level 2
Or GCSE Applied Business studies
Objectives
• To understand the purpose of a business.
• To understand why business set aims and
objectives.
• To be able to give examples of different
business aims.
Starter Activity
Task 1 - Think about yourself for a minutes
and list all the aims you have.
– This year
– Next year
– In about 5 years time
Task 2 – Now think of a few aims Lloyds
TSB bank would have?
Aims
• To make a profit
– Magic formula
• To increase market share
• To provide services to customers
• To improve the quality of the goods and
products
Making a profit
• List some typical business that are
interested in making a profit
• What is profit?
SALES REVENUE - – COST =
(Price * quantity )
-
PROFIT
expenses
What is sales revenue
• Sales revenue = Selling price * no. item
sold
• For example,
10 CD sold
£10 each
Selling price = 10* £10 = £100
1. Making Profit
• All private business are interested in
making profit.
• They want the sales revenue to be more
than the total cost
• The owners of business are sometimes
called ‘entrepreneur and so risk their
capital to earn profits.
• Some of the profit can be re-invested.
Diagram showing making profit
Sales Revenue
Expenses
Reward for
owners
Less
Re-invested in
the business
Profit
Increasing market Share
• Market share is the proportion of the total
market sales that are made by one
company to brand or product.
• The market sales figure is the total value
of sales made by all firms in the market
during one year
Market share using formula
Sales Brand X
Total market sales * 100 = % market share
Example – Woof brand last year has sales of £30
million CD’s and the total market worth £100
million
£30m .
£100m * 100% = 30%
Market share
• The business with the biggest market share is
known as the MARKET LEADER.
• If a business is growing in market that means it
is winning customers from its competitors
• However if the market is growing, .i.e there are
more customers buying the product/service then
market share can also grow
• Example, Walker is market leader in the crisps
industry and golden wonder is small competitors
and so they would want increase market share
by winning walkers customers.
UK supermarket’s market share
UK supermarkets
Iceland:, 1.8, Market Share(source TNS 2006
2%
from BBC news)
Waitrose:, 3.7,
4%
Somerfield:,
5.4, 6%
Morrison's:,
11.1, 13%
Tesco:
Tesco:, 30.6,
37%
Asda:
Sainsbury's:
Morrison's:
Somerfield:
Sainsbury's:,
16.3, 19%
Waitrose:
Asda:, 16.6,
19%
Iceland:
Providing services
• Majority of business in the UK do not
manufacture a product and instead provide a
service to their customer.
• Business include: banks, transport firms,
advertising agencies, advertising agencies,
retailers etc…
• Free services provided by local or central
governments include: the NHS, Local authority
schools.
• However, most business charge for their
services
Providing services
• Businesses such as the Post Office have
mixed objectives
• Its is owned by the state (government) but
it is run like a business and charges for its
services.
• It has to fulfil obligations such as postal
deliveries in rural areas which may not be
profitable.
Improving quality of the product or
service
• In most markets customers have a choice
about the product or service that they use.
• If quality is not good customer may go to
competitors.
• Customers expect high standards.
• Business continue to improve service to
better the quality.
How can businesses improve the
quality
• Improving the design of a product, e.g mobile
phones, cars etc..
• Making them more reliable
• Giving a quick service
• E.g. restaurants will provide good-quality food at
reasonable prices In a pleasant environment.
• Taxi firm will offer a reliable service.
• Business that cannot provide good quality
service will not survive.
Other business Aims.
• All business need to make a profit esp. for long
run
• New business may only need to survive (cover
all their total costs)
– E.g. break-even in the first year, for example.
• A large business may aim to develop and launch
new products or break into new markets
• The aims of a business will affect the behaviour
of the firm, e.g. how it organises itself.
• Break-even-point – where the Total Revenue =
Total cost (so not profit or loss is being made)
Mission Statements
• Mission or vision statement.
• Mission statement – gives key aims of the
business and how it intends to operate and
achieve these aims
• E.g Ford Motor Company’s vision is ‘ to become
the worlds leading company for automotive
products and services’
• Vodaphones is ‘ our shared vision is to be the
world’s mobile communications leader’.
• However Oxfam – ‘Oxfam works with others to
overcome poverty and suffering.