1.4 Business Aims & Objectives Flashcards
All 14 cards in this deck
Name five aims and objectives a business might have.
Profit, survival, growth, providing a service and market share.
Give three reasons a business's aims and objectives may change as it evolves.
Any three of: the business grows from a start-up into an established firm; new legislation; changes in the economy; new technology; more competition; poor performance; changing environmental expectations.
What is a business aim?
The overall target or goal that a business works towards.
What is a business objective?
A specific step or target a business needs to achieve in order to meet its overall aim.
Why is survival usually the main financial aim of a new business?
A new business has start-up costs and few regular customers at first, so it must cover its costs and keep a positive cash flow before it can aim for profit.
Give two objectives a business focused on growth might set.
Any two of: increase sales or profit; widen the product range; enter new markets; increase market share; open more outlets; take on more staff; take over other businesses.
How can increased competition in a market change a business's aims?
Aims may shift from growth towards survival.
How can technology change a business's aims and objectives?
New technology can prompt aims to create new innovative products or services, e.g. selling online or using new payment systems.
How can poor performance change a business's aims and objectives?
It may lead to new aims focused on improving sales, revenue, profit or productivity.
Give two reasons why aims and objectives differ between businesses.
Any two of: their size (e.g. a new business aims to survive, an established one aims for profit or growth); the level of competition; the owner's personal reasons for running the business.
What does the objective 'providing a service' mean?
The business aims to meet customers' or the community's needs rather than to maximise profit, e.g. a charity or a village shop.
Give one risk of a business trying to maximise its profit.
Customers may feel they are being overcharged and buy elsewhere, so sales fall.
Why may an increase in sales not lead to higher profit?
Any one of: the business may have cut its prices to win the extra sales, so it earns less on each one; its costs may have risen faster than its revenue.
Give one reason a growing business may stop aiming for growth.
It may be as big as the owner can control well; growing further could weaken control and customer service, so it aims to keep or improve profit instead.