What is a business

1
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.

2
All Businesses have,Business aims and Objectives
3
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 objectiveSpecific - 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.

4
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

5
Survival

• All business will consider survival
• Early stages of trading
• When trading becomes difficult (during a
  recession)
• Threat of takeover

6
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

7
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?

8
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

9
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

10
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.

11
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

12
Image, reputation social responsibilities

• To customers
• Employees
• Suppliers
• Discus the above and feedback on why you think
  this is important

13
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?

14
Business operations

• Business sometimes set objectives for the
  operation of the organisation
• For example they may decide
• They 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?

15
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

16
What determines business objective

• Size status of the business
• The power of the share holders
• Ownership
• Long and short term objectives
• External internal pressure
• Risk
• Corporate business culture

17
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.

18
Lets look at Tescos

• Tescos 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.
• Tescos 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

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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

20
To grow the UK core

• Tescos 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.

21
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