Objectives and growth Flashcards
What is a Stakeholder?
Stakeholders are people or organisations that have a financial interest in a business.
Owners’ objectives for a business?
■ survival
■ profit
■ growth
■ customer satisfaction
Businesses objectives in their early years?
Businesses often state that they aim to survive, as the first few years in business are the hardest. Businesses are attempting to penetrate the market and obtain a share of the market for their goods and services. That means they wish to try and attract some sales from the existing businesses.
A business may also have the objective to break even. This means that sales revenue will equal the total costs. No profit will be made but there will be no loss either.
Businesses objectives in their later years?
After the early years, a business may wish to expand. This expansion can be by increasing either the range of products or the number of locations. This will hopefully lead to maximising sales and maximising profit.
Sole traders possible objectives in their later years?
Sole traders may have different objectives and may be more interested in satisficing. Satisficing means reaching a certain level or target but not necessarily making the most of anything.
Stakeholders objectives?
Managers may have the same objectives as the owners, especially if they are rewarded for achieving profit. If they are not directly rewarded then they may want to increase their own status.
Suppliers objectives?
Suppliers are likely to want to have repeat orders so they want the business to be reliable so it can pay their bills when they are due.
Employees objectives?
Employees will want reasonable pay and good, safe working conditions. They will want the business to survive because they want to keep their jobs.
Creditors objectives?
Creditors will want to be paid the money that is owed to them.
Customers objectives?
Customers will want a good product and value for money. They will also want the business to survive – they want the business to be reliable so that they can have after-sales service should anything go wrong.
Conflicts in objectives?
Employees want more pay. - Owners want to reduce costs.
Customers want low prices. - Owners want more profits.
Suppliers want to be paid on time. - Owners want to delay payment.
Customers want a high quality product. - Owners want to reduce costs.
How can growth be measured?
■ sales turnover
■ % market share
■ number of employees
■ value of the business
■ the number of locations it covers
What can a business benefit from if it is able to grow?
If a business is able to grow, it may benefit from economies of scale. For example, savings may be made in buying raw materials if they are bought in large quantities.
What is market domination?
Market domination is a business aims to have the greatest market share so that it can set prices
What are the two types of growth and what do they mean?
■ Internal growth means becoming larger from within the business.
■ External growth is expanding by taking over other businesses.
