Business 2.1

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What is meant by the term business objective?

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26 Terms

1

What is meant by the term business objective?

Short-term steps (SMART targets) a business takes in order to achieve its overall aims

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2

What is meant by the term: business aim

Overall long-term target or goal made by the business

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3

SMART stands for:

- specific

- measurable

- achievable

- relevant

- time-bound

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4

Examples of financial aims/objectives

  • Business survival

  • Profit maximisation

  • Growth

  • Market share

  • Increased shareholder value

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5

Examples of non-financial business aims/objectives

  • Social and Ethical

  • Customer satisfaction

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6

Definition of business survival

Operating for a certain amount of time - typical for new businesses

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7

Profit maximisation

Once a business has reached break-even point they may aim for this

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8

Growth - domestic or international

  • number of employees

  • number of products sold

  • income from sales

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9

market share

percentage of the market that the business occupies

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10

increased shareholder value

important for a limited company - if the value of shares increases, shareholders will be happy

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11

social & ethical

a company may aim to be more sustainable or environmentally friendly, giving them a positive reputation.

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12

customer satisfaction

key for firms in a competitive market

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13

Two ways a business can grow?

Internal/Organic and External growth

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14

How can a business finance growth?

  • retained profits/selling of assets

  • loan capital

  • share capital

  • stock market floatation (public limited company)

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15

Examples of organic growth

  • Launching a new product

  • Exploited new technology

  • Gone into new markets (changing the marketing mix)

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16

The 4 Ps

  • Product

  • Price

  • Promotion

  • Place

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17

Benefits of organic growth

  • Low risk

  • Allows the business to develop core strengths - do what it’s good at

  • Financed internally - retained profit

  • No culture clash

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18

examples of external growth

  1. Merger

  2. Takeover

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19

Merger definition

Two businesses join together to form one business under joint ownership

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20

Takeover definition

One business buys/acquires the other

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21

Benefits of external growth

  • Quick/instant growth

  • Sharing business skills

  • Access to other business's customers

  • Gain an instant market presence

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22

Advantages of Mergers

  • Achieve synergy

  • Cost savings

  • Increase of market share

  • Sharing of business expertise

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23

Disadvantages of Mergers

  • Disagreements and culture clash

  • Government intervention

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24

Advantages of Takeovers

  • Quicker growth than mergers, with instant access into new markets. -instant market share, growth and skills

  • Less conflict

  • Cost cutting

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25

Disadvantages of Takeovers

  • Costly

  • Problems with integrating staff

  • Risky

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