Aims and objectives

Question 1

Definition of a stakeholder

Answer 1

A stakeholder is anyone who is affected by the running of a business or service (can be customers, staff, local people, ect.)

Question 2

Definition of a business aim

Answer 2

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.

Question 3

What are some common business aims?(7)

Answer 3

-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

Question 4

Definition of market share

Answer 4

The section of a market controlled by a particular business.

Question 5

Definition of a business objective

Answer 5

An objective is a measureable target which a business will set to help meet their (long-term) business aims.

Question 6

What is a SMART target?

Answer 6

S-specific 
M-measureable
A-agreed
R-realistic
T-time bound

Question 7

Definition of revenue

Answer 7

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

Question 8

Definition of profit

Answer 8

The money left over after taking away all the costs the business incured after making the products from the revenue.

Question 9

Profit equation

Answer 9

profit = total revenue - total costs

Question 10

Definition of fixed costs

Answer 10

These costs remain unchanged no matter how many products the business makes

Question 11

Examples of fixed costs (5)

Answer 11

• VAT
• rent
• insurance
• all salaries
• loan repayments

Question 12

Definition of variable costs

Answer 12

These vary directly with the amount of products the business makes

Question 13

Examples of variable costs (3)

Answer 13

• all wages (based on how much people work)
• raw materials
• electricity (more products being made = machines running more, ect.)

Question 14

Equation of the total costs

Answer 14

Total costs = fixed costs + variable costs

Question 15

Definition of break even point

Answer 15

The point where your business does not make a loss, but does not make a profit.

Question 16

What is the equation to work out the break even point?

Answer 16

break even = fixed costs / (selling price per unit - variable costs)

Question 17

Definition of contribution

Answer 17

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.

Question 18

How do you work out the contribution per unit?

Answer 18

contribution per unit = selling price per unit - variable costs per unit

Question 19

Definition of customer satisfaction

Answer 19

the number of customers, or percentage of total customers whose reported experience with a business exceeds specififed satisfaction goals

Question 20

Defintion of internal growth

Answer 20

When a business grows by buying more assets (eg. factories/shops/trains) and recruiting more workers

Question 21

Definition of external growth (intergration)

Answer 21

this occurs when a business merges with or aquires (takes over) an existing business

Question 22

Definition of empolyee engagement

Answer 22

this is the emotional commitment the employee has to the organisation and its goals

Question 23

Definiton of diversification

Answer 23

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.