1.3 Putting a Business Idea into Practice Flashcards
What is an Aim?
A broad goal or achievement for the business that can be financial or non financial
What is an Objective?
More specific and quantifiable aims
What are types of Financial Aims?
Survival
Increase Market Share
Maximise Sales
Achieve Financial Security
Maximise Profit
How can Financial aims be measured?
In terms of money
How is Survival an aim?
- Important short term aim of all new businesses to not fail
- Needs to make enough money to stay open (buy stock, pay staff etc)
How is Maximise Profit an aim?
- Aim of many businesses
- May take a few years for a business to make any profit at all
How is Increase Market Share an aim?
- aim to capture a part of the market and establish itself
- then aim to increase its market share by taking sales away from the competition, or persuading new customers to enter the market and buy its products
What is Market share?
A percentage of a market’s total sales a certain product or company has made
How is Maximising Sales an aim?
- Good way to increase market share: the business can monitor sales in terms of how much of a product it sells, or how much it makes from selling certain products
- could reduce prices to increase sales
How is Achieving Financial Security an aim?
- businesses can depend on external sources of finance (ie loans) or personal savings of the owner when initially starting
- aims to depend on its own revenue to fund activities (break even)
What are Non Financial aims for a business?
- Personal Challenge
- Personal Satisfaction
- Gaining Independence and Control
- Doing what is right for society
How is Personal Challenge an aim?
- people want the challenge of setting up and running a new business
- If the risks pay off, there are rewards
How is Personal satisfaction an aim?
- people want the satisfaction of owning their own business, particularly if it allows them to follow an interest
- (ie history interest, gives tours of historical sites)
- high job satisfaction
How is Gaining Independence and Control an aim?
- Independent, so can be their own boss
- Control over what they do, can decide how the business is run
- flexible hours, can fit work around other commitments (ie childcare)
How is doing what is right for society an aim?
- acting in a way that is best for society, and socially seen as morally right
- ie against animal testing
What are examples of objectives?
- Survival
- Providing a good product
- Earning a profit
- Customer satisfaction
- Market share
- Ethical targets
- Environmental targets
What are objectives used for?
- set to act as clear targets for firms to work towards
- can later be used to measure how successful the firm has been