3.1 Flashcards
Common Business Purpose
To supply goods or services, normally for profit- survival
Some are set up for community, ethical purposes, public sector and non profit businesses
Common Business Aims
Offer best quality goods
Best customer sevice
Brand awareness and reputation
Developing new products/Services
Sustainability and social conscience
What is a mission statement
Explains business intentions and overall purpose, creates a shared purpose and aim for employees
What are objectives? Name 2 types
Corporate objectives work towards the mission
Functional objectives are departmental which are more detailed and reach towards corporate objectives
Objectives exist to motivate, aid decision making, and monitor success
Objectives should be SMART
Specific Measurable Achievable/Ambitious Realistic Time bound
Define:
Revenue
Fixed cost
Variable cost
Total costs
Total income from sales
Dont change with output eg rent salaries and insurance
Change with output eg cost of raw materials*units sold
FC+VC=TC
Profit
What are profits used for?
Revenue-Costs= Profit
Motivational purposes
Dividends
Reinvesting into the business
Staff bonus
Re-paying debts
Liability:
Unlimited
Limited
Unlimited liability- owners are responsible for debts
Limited liability- business is responsible for debts, no individual pays off the debt (company assets will be sold ect)
Different forms of business
Sole trader
Partnership
Public limited company
Private limited company
Non-profit
How does business type affect aims and objectives
PLC are normally profit orientated due to shareholder pressure for dividends
Survival are main aims for many sole and partnerships initially
External influences on Business operations
Political
Income security
Competition
Interest rates (increase = encourage saving, reduce borrowing and fall in demand)
Demographic changes
Environmental factors
Ethical
Technological
Legislative
