Starting off Flashcards
Mission statement
A written description of the businesses overall purpose or corporate aims.
Intended to make all stakeholders aware of them and encourage employees to work towards them
Corporate objectives
Goals of the business as a whole and vary depending on the size of the business
Functional objectives
Objectives of each department, more detailed and specific. They help to achieve corporate objectives
Objectives are more effective if they are SMART
Specific, Measurable, Agreed,Realistic, Timely
Types of objectives
Profit,
Growth,
Survival
And cash flow
For profit businesses
Usually focus on making a profit, but social and ethical issues are becoming more important eg M&S is carbon neutral due to ethical objectives
Non -profit organisation eg charities,social enterprises
Set up to achieve social and ethical objectives eg housing associations providing affordable housing
Long term objectives
Long term growth
Set the direction of the business, affect the big decisions
Short term objectives
Short term survival, making short term profit, often require you to cut back on long term objectives
Why is profit important?
- It can motivate people
- Profit is a good source of finance
- Profit can be used to attract investors
Business aims
- To offer the highest quality goods
- excellent customer service
- have a great image and reputation
- to develop new products ahead of competitors
- to offer a diverse range of goods or services
- to become fully sustainable or minimise environmental impact
- to invest in the local community or social projects
Unlimited liability
Business and owner seen as one under law eg sole traders
Meaning business debts are the persons and personal assets are in danger
Limited liability
Owners aren’t personally responsible for debts of business as there’s a separate legal identity meaning they can only loose up to the amount they invested
Why do businesses exist
To create employment
Create wealth
Create new products and services
Enhance a country’s reputation
What affects the share prices
Performance of the company
The wider business environment eg economic environment
