Business Objectives Flashcards
what happens when a business diversifies
it increases its range of goods or services it produces
why must a business set objectives (4)
- Employees need something to work towards
- owners need a motivation to keep going and a goal to reach
- objectives can help owners decide where to take a business and what steps to reach that goal
- objectives can help measure the performance of a business, it could be argued that if a business has reached a goal, it has performed well
what is the pneumonic to remember financial objectives
FISPS
Financial security
increased market share
sales
profit
survival
what is the pneumoic to remember non-financial objectives
CISP
Challange
Independance and control
social objectives
Personal Satisfaction
why might business objectives change
market conditions
technology
legislation
internal reasons ie ownership transfer
performance
what are entrepreneurs
someone who takes risks in setting up a business
what are the roles of an entrepreneur
to innovate ideas by finding gaps in the market or improving other practised ideas
responsible for organising production, labour and equipment
what are incorporated businesses
business that have a seperate legal indentity from their owners, they can sue, be sued, liquidated or taken over
what are Unincorporated businesses
bussinesses that have no legal distinction from their owners, everything good or bad is carried out in the name of the owner
what is a sole trader
simplest form of a business organisation, has only one only but can employ any amount, is simple to set up because theres no legal requirements
what are some examples of sole traders in each sector
fisherman or farmers, builders or small manufacturers, taxi driving or haridressing
what are the advantages of the sole trader
keeps all the profit
owner is indepedant, full control
lots of flexibility
simple to set up
can offer personal service since the its small
disadvantages of a sole proprietor
unlimited liability
independance may to big responsiblity
to small to exploit economies of scale
very hard work
owner dies with business, no continuity
what is unlimited liability
when a business owner is personally responsible for all profit and losses in a business such as debts or loans
what is a partnership
a business owned between 2 and 20 people
what is a deed of partnership
a binding legal document which states the rights of business partners
what should a deed of partnership include
HHHTR
how much capital each partner will contribute
how profits and losses will be shared
how much control each partner has
the procedure for ending a partnership
rules for taking on new partners
advantages of a partnership
easy to set up and run, no legal formalities
partners can specialise in their area of expertise
more capital can be raised with more owners
shared workload
disadvantages of partnership
parternships tend to be small
one partners descision is legally binding on all partners
partners share the profit
partners may dispute and fall out
partners have unlimited liability
what are the requirements of a limited partnership
it is possible to have a limited partnership where some partners have limited liability where they contribute capital but take no part in the management of the business
for this to work one partner must have unlimited liability
what law in the uk legislates limited partnerships
in 2000 the uk law changed so that limited liability partnerships could be formers where all partners have limited liability, for this the business has to comply with a number of legal requirements
what are audits
offcial examination of a companies finacial records to check they are correct
what is a franchise
where a business allows another operator to trade under their name
what is a franchisee
an person who wants to trade under a busines name because they do not have their own idea
what is a franchisor
someone who owns a franchise
what does a franchisor offer to a franchisee
a license to trade under the recognised brand name of the franchisor
a start up package, material, equipment etc
training on how to run the business and operate the systems used by the business
marketing suppoort
a geographical area so the business does not face competition by other franchisees in a franchise group
what does the franchisee have to pay in return to a franchisor
a one off start up fee
an ongoing fee usually based on sales
contribution to marketing costs
franchisee may take a share of the profit
advantages to the franchisee
a tried and test idea is used so less risk
back up support is given
set up costs are predictable
disadvantages to the franchisee (4)
profit shared
less control, strict operating rules apply
strict contracts have to be signed
can be an expensive way of starting a business
advantages to the franchisor (3)
fast and cheap method of growth
franchisee take some liability
franchisee are more motivated than employees
disadvantages to a franchisor (4)
profit shared
franchisees may damage reputation
franchisees may buy merchandise somewher else
cost of support may be high
what is merchandise
goods that are being sold
what are social enterprises
business that have a social objective, usually non profit
what are the goals of social enterprises
have a clear environmental mission
income through donations or trade
revinvest most of their profits
are accountable or transparent to the public
what are the 3 forms of a social enterprise
consumer or retail cooperatives
worker cooperatives
charities
what do consumer cooperatives do
owned or controlled by the members, which elect directors. profit is given to members
what do worker cooperatives do
where workers share ownership, like milk or wine growing where employee share profit and management
what do charities do
raise goods or services for or to raise awarenes for needy disadvantaged people such as senior citizens or poverty stricken third world counties
