What is a business

Write down what you think the word business means.

Then look it up and jot down 2-3 other definitions.

To be “in business” means an individual or group of people have agreed a common goal and are actively working towards achieving this goal by supplying products or services to customers. This will be the definition of business used throughout the course.

All Businesses have,Business aims and Objectives

What do we mean by Aims & Objectives?

Business activity is focused around the achievement of business aims and business objectives.A business aim is the goal a business wants to achieve. A primary aim for all business organisations is to add value and in the private sector this involves making a profit. More strategic aims include expansion, market leadership and brand building.

A business objective is a detailed picture of a step you plan to take in order to achieve a stated aim. These need to be SMART in order for the business to know what progress it has made towards achieving the objective:Specific - clear and easy to understand.Measurable - i.e. able to be quantified.Achievable - possible to be attained.Realistic - not 'pie in the sky'.Time bound - associated with a specific time period.

Corporate aims

The corporate aims of a business are its overall purpose.

This is what the business is trying to achieve in the long term.

Different types of business will have different aims. Lets have a look at Tesco

http://www.tesco.com/investorInformation/report97/review/page1.html

Survival

All business will consider survivalEarly stages of tradingWhen trading becomes difficult (during a

recession)Threat of takeover

Profit

It is often argued that the main objectives of private sector business is to make profit

In practice a business is more likely to have a satisfactory level of profit as an objective. This is know as SATISFYING

Growth

Many businesses pursue growth as their main objective

It is argued that firms must grow in order to survive

Failure could result in a number of factors. Can you think what these

might be?

Increasing shareholder value

Many public limited companies aim to increase shareholder value

Legislation requires companies to publish a measure of shareholder value in their annual reports.

Lets have a look and examine Tesco annual report.

http://www.tescoplc.com/files/reports/ar2012/index.asp

Managerial objectives

Common examples Maximise personal salary Maximise their departmental budget Improve their status and recognition Maximise the number of employees in their charge Maximise their leisure time Delegate as much work as possible Maximise fringe benefits

Abuse of power

Sales revenue maximisation

Where a business try to gain the highest possible sales revenue.

This objective will be favoured by those employees whose salaries are linked to sales.

Image, reputation & social responsibilities

Business have started to appreciate how important image is.

Why has this happened? Legislation has been passed which favours

customers There have been changes in social attitudes Competitive pressure forced on business to

take into account the needs of others

Image, reputation & social responsibilities

To customersEmployeesSuppliers

Discus the above and feedback on why you think this is important

Behavioural theories

Assume that business objectives are not determined by owners and managers alone.

Stakeholders, such as the government, customers and pressure groups, may affect the firms objectives.

Can you find 2 examples of this happening?

Business operations

Business sometimes set objectives for the operation of the organisation

For example they may decideThey need to diversify-What does this

mean?To change focus-What does this mean?

Can you give 2 examples of

different business that have done this?

Objectives in the public sector

This is a result of government policy in the last two decades

Historically, the main objectives of public sector business was to supply a public service. British gas, British rail, NHS

Name 2 public sector organisations and find out what their

objectives are

What determines business objective

Size & status of the businessThe power of the share holdersOwnershipLong and short term objectivesExternal & internal pressureRiskCorporate business culture

Mission Statements

Businesses are increasingly producing mission statements.

These include descriptions of he overall aims of the business, they tend to be aimed at the stakeholders in the business.

Lets look at Tesco’s

Tesco’s mission statement: “Our vision is for Tesco to be most highly valued by the customers we serve, the communities in which we operate, our loyal and committed staff and our shareholders; to be a growth company; a modern and innovative company and winning locally, applying our skills globally.”

Tesco’s mission statement is aimed at motivating the staff and giving a simplified objective about what they aim to achieve. From the mission statement Tesco want to earn respect from its customers by providing a good service, and being loyal to its staff and customers. Also they state that as a company they wish to grow and modernise and start open up into new markets

Activity

Using the internet find out the aims and objectives for Tesco- Using your work books write out the aims and objectives for Tesco making sure you have written them in detail.

For example: One of their objectives is to grow the UK core-what does this mean?

You will need to use your research skills

To grow the UK core

Tesco’s goal ‘to grow the UK core’ is according to their website, as relevant today as it was in 1997. The UK is the largest business in the Group and a key driver of sales and profit. This year, Tesco are making a £1 billion commitment to improve the shopping trip, driving a strong pace of improvement in the things that matter for customers which will involve significant revenue and capital investment. These changes will reinvigorate the shopping trip for customers, and consequently deliver improved performance for shareholders.

Home work Activity

In your text books define the following terms giving an example for each

• A business• Products• Service• Aim of a business• Objectives• SMART

• Growth• Survival• Increasing your

market share• Increasing share

holder value• Diversify • Maximise profit• expansion