theme 1- 1.3 Flashcards
What do businesses need to have?
Businesses need to have aims — overall goals that they want to achieve, and objectives, which are like mini aims.
What are financial aims?
Financial aims can be measured in terms of money.
What is the main short-term aim of new businesses?
Survival is the main and most important short-term aim of all new businesses.
What percentage of new firms close within five years?
Around 60% of new firms close within five years of starting.
What is the aim of maximising profit?
The vast majority of firms aim to maximise profits, although it may take a few years for a new firm to make any profit at all.
What does market share indicate?
Market share tells you what percentage of a market’s total sales a particular product or company has made.
What is one of the first aims of a new business regarding market share?
One of its first aims is to capture a part of the market and establish itself.
How can a business increase its market share?
A business can increase its market share by taking sales away from competition or by persuading new customers to enter the market.
What is the aim of maximising sales?
Increasing sales is a good way for a business to grow its market share.
What is financial security for a new business?
Achieving financial security means depending on its own revenue to fund its activities.
What are non-financial aims for starting a business?
Non-financial aims can include personal challenges, personal satisfaction, gaining independence, and doing what’s right for society.
What is an example of a personal challenge in business?
Some people want the challenge of setting up and running a new business, with potential big rewards.
If the risks pay off, there could be big rewards.
How can personal satisfaction be a business aim?
Some people want the satisfaction that comes with owning their own business, particularly if it allows them to follow an interest.
E.g. a history-lover might set up a tour company for a historical site.
What does gaining independence in business mean?
Gaining independence means having control over daily activities and making decisions about how the business will be run.
What is a societal aim for some firms?
Some firms want to ensure they are acting in ways that are best for society and morally right.
E.g. many consumers think that it’s wrong to test cosmetics on animals.
What is the purpose of objectives in a business?
Objectives help businesses achieve their aims.
How are objectives different from aims?
Objectives are more specific and measurable steps towards achieving aims.
Give an example of an objective related to a sales aim.
Increase income from sales by 30% over two years.
What role do objectives play after they are set?
They act as clear targets for firms to work towards and measure success.
What factors can affect the aims and objectives of a business?
- Size and age of the business
- Ownership structure
- Level of competition
What might small and new businesses prioritize in their aims?
Survival and growth.
As firms grow, what do they tend to focus on more?
Achieving financial security and increasing sales and market share.
Why might larger businesses set social aims and objectives?
To avoid bad publicity due to increased public attention.
For small businesses owned by a few individuals, what might be more important than profit?
Achieving personal satisfaction.
