Aims and objectives Flashcards
Definition of a stakeholder
A stakeholder is anyone who is affected by the running of a business or service (can be customers, staff, local people, ect.)
Definition of a business aim
A business aim is the goal that a business is wanting to achieve usually over a long period of time (5+ years, for example). It is influenced by it’s stakeholders.
What are some common business aims?(7)
-to survive (new businesses)
-to make a profit
-to benefit the community (co-operatives)
to increase market share
-to be ethical
-to satisfy customers
-to expand
Definition of market share
The section of a market controlled by a particular business.
Definition of a business objective
An objective is a measureable target which a business will set to help meet their (long-term) business aims.
What is a SMART target?
S-specific M-measureable A-agreed R-realistic T-time bound
Definition of revenue
Revenue is the amount of money that a business makes when selling it’s products/services. It does not take into account any of the costs involved in making the product
Definition of profit
The money left over after taking away all the costs the business incured after making the products from the revenue.
Profit equation
profit = total revenue - total costs
Definition of fixed costs
These costs remain unchanged no matter how many products the business makes
Examples of fixed costs (5)
- VAT
- rent
- insurance
- all salaries
- loan repayments
Definition of variable costs
These vary directly with the amount of products the business makes
Examples of variable costs (3)
- all wages (based on how much people work)
- raw materials
- electricity (more products being made = machines running more, ect.)
Equation of the total costs
Total costs = fixed costs + variable costs
Definition of break even point
The point where your business does not make a loss, but does not make a profit.
What is the equation to work out the break even point?
break even = fixed costs / (selling price per unit - variable costs)
Definition of contribution
Contribution is the amount of money left over after variable costs have been taken away from sales revenue. This can be used to see how much one item contributes to the fixed costs of a business.
How do you work out the contribution per unit?
contribution per unit = selling price per unit - variable costs per unit
Definition of customer satisfaction
the number of customers, or percentage of total customers whose reported experience with a business exceeds specififed satisfaction goals
Defintion of internal growth
When a business grows by buying more assets (eg. factories/shops/trains) and recruiting more workers
Definition of external growth (intergration)
this occurs when a business merges with or aquires (takes over) an existing business
Definition of empolyee engagement
this is the emotional commitment the employee has to the organisation and its goals
Definiton of diversification
it is a corproate strategy to enter into a new market or industry in which the business doesn’t currently operate, while also creating a new product for that new market.
