Business - A292

Business - A292

1. Business objectives

   • A businesses objectives may change over time, for example: In the first year, it will want to survive. This is so the business will become well established and will then become profitable in it's next year of trading. In the second year, the business will then want to make profit and become sustainable. This leads in to the third year, where the business will want to expand., so more profit is made in the long run.
     • There are other types of objectives: These are
       • Sales - more sales = bigger business
       • Market share = a bigger market share means a business may have more customers
       • Elimination of competition - Less competition means a larger market share
     • Targets need to be SMART
       • Specific
         • Measureable
       • Relevant
         • Achievable
       • Time based
   • A social enterprise will not have a primary aim of making profit but to benefit the local community.

2. Stakeholders

   • A stakeholder is someone who takes interest in a business and (possibly) benefits from it.
     • Workers - workers are a stakeholder in a business - they want it to do well so they can get paid and have social security (a house and income)
     • Managers - managers have to plan for the future prosperity of the business, and will want to retain their jobs for the future
     • Owners - want as much profit as possible
     • Customers - want low prices and reliability of service
     • Suppliers - Suppliers need a business so their own business can make profit
     • Government - Wants the business to pay tax - improve local area(s)
     • Competitors - Will want to see how the business in question is doing compared to theirs - this could be taken advantage of and business will change prices depending on how well their competition is doing (destroyer pricing)

3. Business ownership

   • Public Sector - Companies owned by the government that are funded by the public - taxes. Usually provide a service. EG: NHS, West Yorkshire Police, BBC, Ministry of Defence (MoD)
     • Generally a lot larger than businesses in the private sector
   • Private sector - Owned by private individuals or entities. Three types of ownership: Sole trader, partnerships and limited companies
     • Sole trader - Only one business owner. Examples include barbers, plumbers and butchers. All the profit that is made is kept as there is only one person associated with the business ownership. This also means that only one person is in control so ideas can be implemented into the business structure quicker. However a sole trader has unlimited liability, so possessions can be lost if there is outstanding debt to be paid.
     • Partnerships - has between 2 and 20 owners in the business. This is good because it means that liability is shared therefore there is less stress because workload is shared. This can also mean that owners don't have to work long hours so they can spend more time with their family. Investment, risk and workload is shared. However there is still unlimited liability, and the risk of arguments means the business can collapse.
   • Integration
     • There are three types of integration: Horizontal, Backwards Vertical and Forwards Vertical
       • Horizontal - businesses at the same stage of production.
         • Advantages: Reduces cost of production (economies of large-scale production) which increases profit margin.
           • Disadvantages - reduced choice (of products for consumers) which results in a reduced product range
       • Backwards Vertical - businesses take over or merges with a supplier..
         • Advantages - Businesses would have control over supply which can cut the costs of purchasing raw materials (self-sustainability)
           • Disadvantages - Can lead to there being a less choice of products, as business may cut off supplies to other business by merging with them.
       • Forwards vertical - businesses take over or merges with a business at a higher stage of production