Topic 7-Business Aims And Objectives

Question 1

Mission statement

Answer 1

This sets out what a firm is trying to achieve. It outlines why the firm exists. It may include a statement about the values of the business. It means everyone knows what the business is aiming to achieve

Question 2

The benefits of having a mission statement

Answer 2

• It provides the business with a sense of direction therefore they know what they are working towards
• It can act as a motivator to staff therefore they’re likely to be more productive

Question 3

Aim

Answer 3

A long term target that a firm is trying to achieve.For example to grow

Question 4

Smart objectives

Answer 4

Short term targets which are specific, measurable, attainable, realistic and time related.For example, to increase sales by 10% in the next year.

Question 5

Examples of aims

Answer 5

Survival-This means that a business is able to continue trading.It is particularly important when a business sets up and in different economic times
Profit-The surplus money that is left over after all costs have been taken into account.It is worked out by Total Revenue-Total cost
Growth-An increase in the size of a business as a result of higher sales or increased market share.It is the natural aim once a business has become established in the market

Question 6

Aims of the public and private sectors

Answer 6

• Private sector(Sole Trader,Partnership, Limited companies):
  
  • To create and improve profit
  • To grow and expand
  • To give customer satisfaction
  • To have a good corporate image
• Public sector
  
  • To provide a service
  • To break even
• Social enterprise
  
  • To contribute to the image
  • To relieve social problems

Question 7

Reasons why aims and objectives are helpful to business

Answer 7

• Set targets so that stakeholders know what the business is trying to achieve
• Can be motivating to staff to work towards them and rewarding if they achieve them
• Can be used to monitor performance and see if an alternative strategy is needed aims/objectives are not being achieved

Question 8

Ethical and moral issues associated with business aims

Answer 8

• As well s making a profit firms want to deal fairly and honestly with their stakeholders.For example,most businesses pay their employees fair wages,most businesses refuse to buy goods which have been made in countries where countries where workers are exploited and many businesses sell ‘Fair Trade’ products
• Firms will consider a range of ethical issues in their business aims such as:the environment, employee working conditions, equality and social responsibility

Question 9

Corporate image

Answer 9

The reputation that the business has in the eyes of stakeholders.A business is trying to create a positive corporate image so that people will judge the business in a posting light

Question 10

Social responsibility

Answer 10

The contribution that the business makes to society.It involves doing more than the law states because they recognise that they are a part of the community in which operate