Chapter 5- Business And Shareholder Objectives Flashcards
Business Objectives
Aims/targets a business works towards
Benefits of setting objectives (4)
Give workers a clear target + motivate
Focus decision making
Unites the business
Measure of success
Profit
Total income of a business - total costs
Market share
% of total market sales held by one brand or business
What profits do (2)
Pay a return
Provide finance
How to increase returns to shareholders (2)
Increase share price
Increase profit
Social enterprise
Social objectives as well as to make profit to reinvest into the business
Triple bottom line
(3 social enterprise objectives)
Social
Enviromental
Financial
Objectives of a public sector business (3)
Financial
Service
Social
Common business objectives in the private sector (6)
Survival
Higher returns to shareholders
Profit
Returns to shareholders
Business growth
Market share
Service to community
Why is survival a business objective
When the business is newly set up or the economy is in recession, the objectives are to survive. New competition may also bring up this objective. Businesses lower prices to survive even though it may lower the profit on each good sold.
How is business growth measured
Value of sales
Output
Why business growth is an objective (5)
Makes jobs more secure
Increase salaries and status of managers
Expand into new markets (expands opportunities and spreads risk)
Obtain higher market share (growth in sales)
Obtain cost advantages/economies of scale
Benefits of increased market share (3)
Good publicity
Increased influence over suppliers
Increased influence over customers
Why business objectives change (3)
It survived, now aims for profit
Achieved higher market share, now wants higher returns for shareholders
Profit making business faces a recession, now just wants to survive
