Aims and Objectives

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Aims and Objectives

• OCR National
• Business Studies level 2
• Or GCSE Applied Business studies

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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.

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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?

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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

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Making a profit

• List some typical business that are interested in
  making a profit
• What is profit?
• SALES REVENUE - COST PROFIT
• (Price quantity ) - expenses

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What is sales revenue

• Sales revenue Selling price no. item sold
• For example,
• 10 CD sold
• 10 each
• Selling price 10 10 100

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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.

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Diagram showing making profit

• Sales Revenue Expenses
• Profit

Reward for owners Re-invested in the business
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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

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Market share using formula

• Sales Brand X
• Total market sales 100 market share
• Example Woof brand last year has sales of 30
  million CDs and the total market worth 100
  million
• 30m .
• 100m 100 30

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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.

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UK supermarkets market share
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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
  

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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.

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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.

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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.

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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)

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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 Companys vision is to become
  the worlds leading company for automotive
  products and services
• Vodaphones is our shared vision is to be the
  worlds mobile communications leader.
• However Oxfam Oxfam works with others to
  overcome poverty and suffering.