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Aims and Objectives. OCR National Business Studies level 2 Or GCSE Applied Business studies. 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. Starter Activity.

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Aims and objectives

Aims and Objectives

OCR National

Business Studies level 2

Or GCSE Applied Business studies


Objectives
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.


Starter activity
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?


Aims and objectives
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


Making a profit
Making a profit

  • List some typical business that are interested in making a profit

  • What is profit?

    SALES REVENUE - – COST = PROFIT

    (Price * quantity ) - expenses


What is sales revenue
What is sales revenue

  • Sales revenue = Selling price * no. item sold

  • For example,

    10 CD sold

    £10 each

    Selling price = 10* £10 = £100


1 making profit
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.


Diagram showing making profit
Diagram showing making profit

Sales Revenue Expenses

Profit

Reward for owners

Re-invested in the business


Increasing market share
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


Market share using formula
Market share using formula

Sales Brand X

Total market sales * 100 = % market share

Example – Woof brand last year has sales of £30 million CD’s and the total market worth £100 million

£30m .

£100m * 100% = 30%


Market share
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.



Providing services
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


Providing services1
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.


Improving quality of the product or service
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.


How can businesses improve the quality
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.


Other business aims
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)


Mission statements
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 Company’s vision is ‘ to become the worlds leading company for automotive products and services’

  • Vodaphones is ‘ our shared vision is to be the world’s mobile communications leader’.

  • However Oxfam – ‘Oxfam works with others to overcome poverty and suffering.