Note
Studied by 20 peopleNoteStudied by 25 peopleNoteStudied by 113 peopleNoteStudied by 8 peopleNoteStudied by 16 peopleNoteStudied by 14 people
Topic 1 Business objectives
Business objectives
Financial Objectives involves making profit and is business objective based. It could eve be just the growth of the business.
Main financial objectives
Survival | Keeping business alive |
Profit | Profit maximization |
Sales | Increasing about of sales of market share |
Market share | Increase proportion of sales within that market |
Financial security | Earn a livable about and have more for back up |
Non- Financial objective is something not related to money. It can happen through the business but it is mainly about satisfaction.
Social | Charities environment and contributing to the community |
Personal satisfaction | Doing somehting enjoyable and that could mean the success of the business |
Challenge | Developing and hard work might be enjoyable to see results |
Independence and control | Making their own choices and business directions |
Objective change
Business objectives may change over time due to a number of internal factor and external factors effecting what the business must do to continue to survive and improve.
Internal factors
Profit margins are low
New leader or manger
Owner is retired
Preferred social objectives
External factors
Market conditions | Increased competition |
Technology | e-commers, robots , development |
legislations | Laws or regulation change |
Customer needs | New daily life style routine |
Economy | Tax, money , local salary |
Social factors | Eco friendly competitors |
Stake holder
Someone who is effected by your business or has an interest in your business
Owner
Customer
Employee
Manger
Supplier
Government
Financer
Sole trader & Partnership
Sole trader : Is a business with a single owner who makes all the decisions and gets to keep all of they profit. They often run a small business.
Advantage | Disadvantage |
Easy & Inexpensive to set up | responsible for debt |
Complete control | limited access to finance leaders |
Gains all profit | Limited skill set and ideas |
simple tax | Long hours and heavy work load |
flexible and can provide personal serves for customers | Unlimited liability |
Partnership : Involves 2 or more people joining togther to own a business and run it together
Advantage | Disadvantage |
Easy & inexpensive | unlimited liability for debts |
Few legal formalities | legally binding all owners |
Shared decision making | potential disruption (Arguments) |
More skill and knowledge and ideas | profits are often shared equally despite how much was put in |
more finance access and capital |
Private and public limited companies
Private limited companies: Owned by one or more shareholder whose responsibility for debts is limited to the level of their initial investment only.
Advantages | Disadvantages |
Limited liability | expensive & time consuming |
greater finance and investment | complex operation rules |
ownership can be transferred | financial reporting and auditing |
Business continuity (Meaning if the owner died it simply gets passed on and not closed) | shareholders may have limited control depending on investment/ |
Public limited companies: Large business that shells shares publicly on the stock exchange
Advantages | Disadvantages |
High capital can be raised | Complex legal and financial regulations |
risks are spread amongst many | expensive |
shares are bought and sold easily | management team are mor likley to prioritize short term financial performance |
Many directors and perspectives | hostile take over meaning that competitors can buy shares from your own business. |
high visibility ( name of businesses is known ) | |
Larger chance to dominate market |
Public corporations
public corporations are owned and controlled by the government to help the economy. they are normally paid through the tax.
Benefits | Draw backs |
Main control of essential supplies | cost to goverment |
public owner avoids duplication | lack of competition |
saves jobs | political interference |
service can be profitable for those who are poor | hard to control |
Franchises
An individual buys rights to operate a business model from a larger company (Franchiser)
Advantages | Disadvantages |
Recognition | fixed sum you must pay for them to build the franchise |
product training | regular pay back to the main franchise |
equipment and suppliers | inflated prices |
exclusive advice | right to run could be taken away and over all you have no control on any changes and it must be operated just like the main franchiser. |
Social enterprise
Social enterprise is a business that has the primer purpose of creating social or environmental impact in addition to profit
Objectives can be
Social | provides jobs, supports homeless & social groups |
Environmental | Animals, nature, pollution ect… |
Ethical | Treating people fairly |
Financial | Make profit to invest in revenuew |
Advantage | Disadvantage |
Good reputation | Media opinions |
Customer loyalty | profit lack |
Competitive advantge | decision making can be slow |
financial support |
Multinational
A multinational company is a business that is registered in one country but as a manufacturing operating/ outset in a diffrent country. (Things like globalization partly contribute to this)
Advantages | Disadvantages |
Low costs | Legal and tax complexities |
Potential for high sales | public relations |
High profile | political instability |
Bypass trade barriers | |
low tax liabilities |
Stake holder is someone who is effected by your business or has an interest in your business
Impact of multinationals on stake holders
Local residence | paid high quality, skill & Motivation , child labor ect… |
Local businesses | May cause struggle on local businesses. Law might get involved |
Local government | May par tax and business rates to local councils & authorities |
national government | balance of payment to help better economy , money may come from business |
Globalization
Globalization is the business and economic of diffrent countries through increasing freedom in the cross border movement of people, goods, services, technology and even finance'
Reasons for globalization
Improve transport
development in technology
familiarity with global brands
market saturation
government commitment
deregulation
Opportunity for globalization
Large market
Economics of scale
Labor
Taxation
Threats of globalization
Increased competition | more research money |
increased need to develop profitable niche | losing sales cand market share |
Vulnerability to international take over | being dominated by other companies |
Greater risk from external shocks | economic difficulties |
Main sector of industry
The primary sector | Extraction of raw materials |
The secondary sector | The manufacturing of a raw material into a product |
The tertiary sector | Wide range of services |
Location
Factors effecting business location choices
Proximity to market | how close you are to your competitors or how far depending on what kind of business you run |
Proximity go labor | Available and skilled workers and how much their minimum salary is |
Proximity to Materials | Available resources |
Proximity to competitions | Share customer base. For example clothing |
Nature of a business | Depending on what business you run and what it needs where would you chose the location to be. |
Infostructures | Major roads and networks |
E-Commers involves the buying and selling of goods and services online
Factors to consider doing E- commers
Lower business costs
Cost and availability of employee
Proximity to transport
Recognitions
Less developed countries
Low costs
Low labor costs and minimum wadge
Employee and customer have less opportunities to pursue legal actions
More developed countries
Good infostructure
Highly - skilled workers
High slandered of living and better customer life style
Laws and their impact on location
Employment law | pay, equal treatment ect.. |
Environmental Law | Storage, waste, water usage and even packaging |
Consumer Law | description of ingredients, refunds, products safety |
Trade blocs
A trad bloc is a group of countries that come togther and agree to reduce or remove any barriers in the trade that exists between them
Exchange rate equations
Value of currency 1 X exchange rate = Value of currency 2
Value of currency 2
- - - - - - - - - - - - - - - = Value of currency 1
Exchange rate
Interest rates
The interest rate is the cost of borrowing money and the reward for saving
Higher loan repayment | Pay money owned along with interest |
Fall in exports | Demand for product over seas as a higher interest rate making their currency stronger |
Credit sales fall | Less likley to buy goods on credit |
Saving becomes more attractive than investment | less willing to make capital investment when their retained profit make more profitability. this interests then to invest into saving |
Government objectives
Common government economic objectives
Economic growth
Healthy balance of payment
Low Unemployment
Low inflation
Governments often raises interest rates on banks too mange business gain and citizen spending.
Commen sources of tax revenue
Income tax
Sales tax - (VAT)
Import tax
Excise tax - (Manufactured products like alcohol and tobacco)
Key infrastructures the tax money is used for
Hospital
School
Flood defenses
Transport networks
Judiciary
Energy
External factors
External factors can change a business decision making.
Social factors
Political factors
Technological factors
Environmental factors
Social factors effecting a business
Education - How educated people are
Migration - labor costs and skill
Awareness - contemporary issues
Demographic structure - ageing people
Social mobility - citizens health in the country
Technological factors
Data base
Email and communication apps
Finance programs
Online technology
NoteStudied by 20 peopleNoteStudied by 25 peopleNoteStudied by 113 peopleNoteStudied by 8 peopleNoteStudied by 16 peopleNoteStudied by 14 people