The Nature and Purpose of Business

These vocabulary flashcards cover Unit 3.1 of the Business curriculum, focusing on the nature and purpose of business, mission statements, hierarchy of objectives, and profit measurement of profit.

Business

Organizations that provide goods and services for their customers and come in many different shapes and sizes.

Business Ownership

A factor, alongside size and operations, that varies enormously across different business entities.

Business Existence

The concept of why organizations are created, varyingly based on talent, market gaps, or providing services.

Entrepreneur

An individual who starts a business, taking risks in hopes of bearing the rewards of profit.

Talent or skill

A personal initial motivation for individuals deciding to set up their own business.

Gap in the market

A spotted opportunity that serves as an initial motivation for starting a business.

Own Income

A personal motivation for entrepreneurs who wish to be their own boss and earn independent revenue.

Ethical Way

A motive for businesses that exist to provide services or meet needs in a more socially responsible manner.

Goods and Services

The primary offerings that businesses provide for their customers to fulfill their purpose.

Mission

An organisation’s aims or long term intentions, representing its ultimate purpose.

Mission Statement

A declaration that serves as the overriding goal, strategic perspective, and reason for a business's existence.

Vision

A strategic perspective providing a view for the future of an organization.

Hierarchy of Objectives

The structure showing how mission, corporate, functional, team, and individual targets interrelate.

Aim

The top-level component of the hierarchy of objectives, sitting just below or within the mission.

Corporate Objectives

Goals set for the whole organisation which enable it to achieve its overall mission.

Functional Objectives

Specific goals for departmental areas such as marketing, finance, operations, and human resources.

Strategic (Hierarchy direction)

Moving up through the hierarchy of objectives, from individual targets toward the mission.

Detailed (Hierarchy direction)

Moving down through the hierarchy of objectives, from the mission toward individual targets.

Business Unit Targets

Specific objectives set for a particular division or branch within a larger company's hierarchy.

Individual Targets

Personal goals at the lowest level of the hierarchy of objectives hierarchy.

Business Objectives

Specific intended outcomes of business strategy and the anticipated end results of activities.

Primary Aims

The core goals that business objectives are specifically designed to help achieve.

Objective Cascade

The process where objectives flow down from the mission to become progressively more specific.

Consistent Objectives

The requirement that objectives at each level align with those that are above them in the hierarchy.

SMART Objectives

A tool used to assist the process of setting effective targets: Specific, Measurable, Agreed, Realistic, and Time bound.

Specific (SMART)

The "S" in the acronym, meaning an objective must be a clear statement of what is to be achieved.

Measurable (SMART)

The "M" in the acronym, meaning performance against the target can be quantified.

Agreed (SMART)

The "A" in the acronym, meaning objectives are accepted by those responsible for achieving them.

Realistic (SMART)

The "R" in the acronym, meaning the targets are achievable within the business's capabilities.

Time bound (SMART)

The "T" in the acronym, meaning there is a specific deadline or timeframe for achievement.

Profit Maximisation

A business objective where the goal is to achieve the highest possible profit.

Profit Satisfying

A profit-related objective that aims for a level of profit that is acceptable rather than the absolute maximum.

Growth

A business objective involving the increase of market share, sales turnover, or the number of outlets.

Survival

A critical business objective, especially in competitive markets, focused on remaining in business.

Cash Flow

A business objective focused on ensuring there is sufficient cash flowing into the organisation.

Social Objectives

Goals set to benefit society or address community needs beyond profit-making.

Ethical Objectives

Goals focused on behaving in a responsible way, such as ensuring fair trade is part of policy.

Sustainable Company

A goal related to social and ethical objectives, ensuring long-term environmental and social viability.

CSR Policy

Corporate Social Responsibility; a policy that includes social and ethical aims like fair trade.

Strategy

The medium to long term plans that form the basis for business decisions.

Revenue

The total income generated from sales, also known as turnover or sales.

Turnover

A term used interchangeably with revenue and sales when measuring business profit.

Sales

The amount of goods or services sold by a business, used to calculate its revenue.

Fixed Costs

Costs that do not change based on the level of output or production.

Variable Costs

Costs that vary directly with the volume of production or sales.

Total Costs

The sum of fixed costs and variable costs within a business.

Profit Measurement

A process that includes the analysis of revenue, fixed costs, variable costs, and total costs.

Coordination of Activity

One reason businesses set objectives is to ensure different parts of the company work together.

Sense of Direction

A benefit of setting objectives, providing a clear path for all employees to follow.

Motivation

A purpose of setting objectives, giving employees specific targets to strive for and achieve.

Measuring Progress

The ability for managers to compare actual organizational achievement against specific targets.

Strategic Decision Basis

Business objectives provide the foundation for medium-long term strategic plans.

External Environment

The factors outside a business structure that influence how it operates and sets its goals.

Business Forms

Different types of ownership structures through which a business entity functions.

Performance Measure

The use of objectives as a standard to evaluate how well individuals or groups are doing.

Clear Statement

A requirement for an objective to be an effective focus for all members of the organization.

Company-wide

The scope and reach of corporate objectives within an entire organization.

Departmental level

The scope of functional objectives, typically covering areas like marketing or finance.

Guide the Actions

The purpose of setting functional objectives for a specific division or department.

Marketing Functional Area

A department that sets goals like successfully launching new products.

Finance Functional Area

A department that sets goals like improving cash flow and reducing average payment times.

Operations Functional Area

A department that sets goals like increasing factory productivity.

Human Resources

A functional area that focuses on goals related to personnel and service levels.

Increase Sales (Corporate Goal)

An example corporate objective that can be broken down into functional marketing targets.

Reduce Costs (Corporate Goal)

An example corporate objective that can be broken down into functional operations targets.

Increase Cash Flow (Corporate Goal)

An example corporate objective that can be broken down into functional finance targets.

Improve Customer Satisfaction (Corporate Goal)

An example corporate objective that can be broken down into functional people/service targets.

Five New Products

A marketing objective example to launch this many items in the next two years.

Ten Percent Productivity Increase

An operations objective example aiming for higher factory output by the year $2025$.

Average Invoice Time

A finance objective example to reduce this from $75$ to $60$ days.

High Customer Service Level

A people objective example aiming for a specific $95\%$ level.

Inflation

An economic change mentioned as being unlikely to cause both higher costs and higher demand alone.

Interest Rates

An economic factor that, when increased, generally does not lead to higher demand for products.

Fair Trade Principles

An initiative likely to lead to both higher costs and higher demand for a product.

Competition

A market factor; less of this may rise demand but won't necessarily increase costs.

Public Sector Organisations

Organisations that do set business objectives, despite some false assumptions.

Statement 1 (Mission statement)

A statement that is false if it claims the mission statement sets out all main objectives.

Walkers Crisps

The biggest crisp brand in the UK and a market leader.

Walkers Volume Share

The crisp brand's UK market share by volume, which is $24\%$.

Walkers Value Share

The crisp brand's UK market share by value, which is $21\%$.

Market Leader

A business, like Walkers, that holds the largest share of a particular market.

Walkers Main Objective

To increase market share so that they can remain the market leader.

Mission MLogo

The M in the logo mission activity representing McDonalds.

Mission ILogo

The I in the logo mission activity representing Microsoft.

Mission S (AS)

The first S in the logo mission activity representing ASDA.

Mission S (Sam)

The second S in the logo mission activity representing Samsung.

Mission I (Insta)

The second I in the logo mission activity representing Instagram.

Mission OLogo

The O in the logo mission activity representing Google.

Mission NLogo

The N in the logo mission activity representing Nandos.

Newlands Girls' School Motto

The Latin phrase "VINCIT VERITAS".

Newlands Girls' School Mission

To build an ambitious and caring community of people who eagerly contribute to school life.

Newlands Girls' School Ethos

The organizational belief that there are no limits to what can be achieved.

Tesla Mission

"To accelerate the world's transition to sustainable energy."

TED Mission

"Spread ideas."

Secure Payment Solution

A mission "to build the web's most convenient, secure, cost-effective payment solution."

Amazon Mission

"To be Earth's most customer-centric company, where customers can find and discover anything."

Lowest Possible Prices

An endeavor stated by Amazon as part of its customer-centric mission.

BeReal. Mission

To make users post candid, spontaneous, filter-free content without overanalyzing.

Nike Mission

"Bring inspiration and innovation to every athlete in the world."

Athlete Definition

According to Nike's mission: "If you have a body, you are an athlete."