✅ 1.3 - 1.5 Aims & Objectives, Stakeholders, Location

Question 1

What is a business aim?

Answer 1

An aim is the overall long-term goal of a buisness

Question 2

What are objectives?

Answer 2

Objecitves are the measureable steps that are sought in a given time, in order to achieve an aim

Question 3

What are the main aims and objectives of a business?

Answer 3

1. Survival
2. Profit maximisation
3. Growth
4. Market share
5. Customer satisfaction
6. Social and ethical objectives
7. Shareholder value

Question 4

What is the difference between objectives and aims?

Answer 4

Objectives are more specific than aims

Question 5

When are business objectives set?

Answer 5

Business objectives are set once the business has established it’s aim

Question 6

What are the advantages of setting business objectives?

Answer 6

• They act clear targets for businesses to work towards
• They can later be used to measure whether a business has been successful or not

Question 7

Give 3 factors that influence the objectives of a business

Explain why

Answer 7

• Size of the business
• Level of competition faced
• Type of business

Question 8

Give one example why the size of a business influences the objectives of a business

Answer 8

• Smaller businesses depend on the word of mouth to survive, so customer satisfaction may be a major objective for them
• Larger businesses get more attention from the public, so their objectives may be to act more ethically or protect the environment to avoid scrutiny

Question 9

Give one example why the level of competition faced influences the objectives of a business

Answer 9

If a business operates within a highly competetive market, then their objectives may be to hold onto its market share rather than to maximise profits

Question 10

Give one example why the type of business influences the objectives of a business

Answer 10

Not for profit businesses are more likely to focus on social or ethical objectives rather than growth or profit

Question 11

Explain how a company’s objectives can change over time as they evolve

Answer 11

When a business is new or a start-up, the objectives will mainly be focused on survival. However as it grows and becomes more financially stable, it might aim to maximise long term profits, and its objectives might be to expand into another country to do so

Question 12

Give 4 typical objectives of large businesses

Answer 12

• Becoming the dominant business in the market
• International expansion,
• Increasing shareholder value
• Ethical and Environmental considerations

Question 13

Give 4 factors of the dynamic changes in the world that can change a businesses’ objectives

Answer 13

• New legislation
• Changes in the Economy
• Changes in Technology
• Environmental & Ethical Expectations

Question 14

How can objectives be used to measure the success of a business?

Answer 14

• Counting the number of employees to see if it has met it’s growth objective
• Check the value of shares in the stock market to see if it has met its shareholder value objective
• Looking at the profit to see if it has met its yearly profit target

Question 15

What is a stakeholder?

Answer 15

A stakeholder is any individual, group or organisation that is affected by a business

Question 16

Who are the 5 main stakeholders of a business?

Answer 16

• Owners
• Employees
• Customers
• Local Community
• Suppliers

Question 17

Who is the most important stakeholder of a business & why?

Answer 17

The most important stakeholder of a business is the owner as:
* They make a profit if the business is successful
* They want high dividend payments
* They decide what should happen to the business

Question 18

Why are employees a main stakeholder of the business?

Answer 18

• If a business is doing well or bad, it can have an impact on their wages
• They are interested in their job security and promotions, as well as maximising their pays

Question 19

Why are customers a main stakeholder of the business?

Answer 19

Customers are a main stakeholder of a business as the business serves a customer’s needs and wants

Question 20

Why is the local community a main stakeholder of the business?

Answer 20

Becuase business operations can:
- Provide employment and economic activity to the community
- Potentially cause noise and environmental polution

Question 21

Why are suppliers a main stakeholder of a business?

Answer 21

Suppliers are a main stakeholder of a business because:
- A business buys its raw materials from the supplier
- If the business becomes more profitable, it will buy more supplies, so the supplier will recieve more income

Question 22

What impact do different customers & employees have on the objectives of a business?

Answer 22

• Customers’ needs and wants change over time and a business needs to adapt in order to meet their needs
• Employees manage the day to day activities of a business so keeping them happy keeps them working effectively

Question 23

How could a business face conflicts between stakeholders?

Give one example

Answer 23

When different stakeholders want different things
e.g. conflict between maximising profits and being an environmentally-friendly business

Question 24

List the factors that affect where a business is located?

Answer 24

• Location of the market
• Location of raw materials
• Labour
• Competition
• Costs

Question 25

Why may the location of raw materials influence a business’ location?

Answer 25

For some businesses, being located near raw materials cuts down transport costs as they’re typically using bulky raw materials to transport into smaller, finished products

Question 26

Give 3 reasons why location of the market may influence a business’ location?

Answer 26

• Some people may prefer to locate where customers are easily accessible (e.g. restaurants)
• Some businesses have to pay more to transport their finished products than their raw materials, so they would find it cheaper to locate near their customers
• Some businesses that sell products across the world may setup production sites in countries with a large target market to reduce transport costs and import taxes

Question 27

Give 3 reasons why labour may influence a business’ location?

Answer 27

• Locating in an area of high unemployment (like Bangladesh) helps to keep the wages low (vice versa)
• It also means that there is a good selection of people to choose from and the business can find enough workers
• Certain areas can be typically focused on certain skills (e.g. Manchester for manufacturing, London for IT)

Question 28

Why may competition influence a business’ location

Answer 28

• Being closer to competitors means that it is easier to find skilled workers as there are already suppliers and there is already a demand for this type of labour
• Other businesses might prefer to be away from competitors so that they don’t lose sales

Question 29

Why may cost influence a business’ location?

Answer 29

The cost of rent varies between different places.
e.g. renting floor space in high street would be more expensive than renting floor space elsewhere