1.2 The Organisation

1.2.1: Business objectives and their importance

UNIT 1.1

Target Learning Objective Outcome Who? Keywords

Demonstrate an understanding that businesses can have several objectives – and the importance of these can change

• Understand the need for objectives in business

• Identify the importance of businesses having objectives

ALL

C

• Aims

• Mission statement

• Objectives

• Profit maximisation

Demonstrate understanding of different objectives such as growth, profitability and market share Aims of private and public sector enterprises

MOST

B

SOME

A

1.2 The Organisation

Aims

• An aim is a goal or target.• A business may have more than

one aim.• Aims should always be appropriate

to the business activity and size of the business.

Example of aims

• The main aim of the Australian football team in 2013 was to win the World Cup.

• This aim would not have been appropriate for a local club.

Example of aims

• A school or college may aim to improve its examination results (this links to the core activity)

• A supermarket may aim to increase its profits.• Microsoft wanted to gain a share of the

computer games market with its Xbox. This aim would not have been appropriate for a small, local computer company.

Types of business aims

• A business aim does not always have to be to make profit

Types of business aims: Private sector

• To survive as a business or expand• To make a profit• Growth• Increase market share• Image, reputation and social

responsibility

Aims: Public Sector

• Proving health care• Providing education• Providing community activities

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• Aims and objectives give organisations a direction to work towards

• Private sector organisations seek to make a profit, usually the main focus for their aims and objectives.

• Public sector organisations may seek to make a profit but will focus on public service.

Mission Statement

• The overall reason for a business’ existence is known as its corporate aim or mission.

• Eg. A business could set out to be ‘the lowest cost producer in Europe's or ‘the worlds favourite car hire firm’.

• A mission statement is meant to inspire and define the underlying purpose of the organisation

• -general purpose and aims of the business

‘To boldly go where no man has gone before’-Star Trek

From Mission Statement to Objectives

• A mission statement may be motivating but it lacks the specific information needed for planning.-What does ‘best industry mean’? Or ‘Most

profitable’?• To plan properly a business needs to turn the

mission into a objective.

Distinction between aims (or mission) and

objectives

• Mission: The purpose of the business• Aims: The goals the business wants to

achieve• Objectives: specific targets. Must be

achieved if the business can fulfil its aims. Practical steps to achieve the goals – usually quantifiedAn aim is what you set out to do

An objective is a target you want to achieve

Objective

• Will specify exactly what the business wants to measure, how much of an increase it wants to measure and when it wants to achieve its target.

‘To increase profits by 20% over a five-year period’

The business then has to turn this overall objective into more detailed targets for individual departments and managers.

Objectives

• Objectives are steps which help to achieve an aim.

• All objectives should be measurable – so that achievement can be checked.

• All objectives must be monitored regularly – to check achievement.

ObjectivesThe best objectives are SMART.

S

M

A

R

T

Specific

Measurable

Agreed (Achievable)

Realistic (researched)

Time-constrained

S

M

A

R

T

Save £130 for a holiday

£5 per week

Friends informed!

Leaves £20 for spends

Do for 6 months

Example of SMART objectives

Decide Aims Specify Objectives

Check Performance

Regularly

If unsatisfactory

Take Corrective

action Adjust/review

objectives

Change aims

Setting and

Monitoring

Aims

And

Objectives

Get Fit Lose 10 lb In 4 weeks

Weigh self each week

Exercise more

Lose 10 lb in 10 weeks

Learn to drive

ActivityOn a separate piece of paper to hand in

• Write down your Mission statement for your studies this year.• Write down your aim for iGCSE Business• TARGET for iGCSE Business studies (Grade).• Write at least one SMART objective for yourself.• E.g ‘ To study at least 2 hours a week and achieve a B at the end of the year’

(Measureable and time specific)

Why set aims and objectives?

• Aims provide a focus for the business.• Aims highlight key areas of development

and achievement.• Objectives ‘break down’ aims so that they

are easier to achieve• Objectives can be ‘shared’ so that many

people are responsible for their achievement in their own areas.

Example of shared objectives

• Sales investigate new selling opportunities• Marketing increase advertising/promotions• Production produce more to meet increased

demand• Distribution increase supply of goods to retailers

Aim: To improve profitsObjective 1: To increase sales by 10%

over the next 6 months

Summary

• Mission: The purpose of the business• Aims: The goals the business wants to achieve• Objectives: Practical steps to achieve the goals – usually

quantified.

• Aims must be relevant to the organisation.• Objectives are steps to achieve targets.• Objectives can affect everyone in the organisation.• Objectives must be monitored regularly.

p

• Businesses work to broad goals, which may be broken down to objectives.

• Objectives should be SMART• Broad objectives usually relate to profit,

growth & market share

Sell this ProductThe challenge:Identify an important

feature/concept from this lesson…. ‘Sell it’ to the class.

• ‘Our product ‘setting aims’ are like no other because…’

• ‘Your company needs to ‘have a mission statement because’ our product because…’

• ‘Setting Objectives will revolutionise…

• ‘Benefits of setting aims is groundbreaking because….’

PlenaryLevel achieved_____

What do you now know as a result of today’s lesson?

What are your areas for improvement? What are you going to do about this?

1.2 The organisation

1.2.2: Stakeholders and their differing objectives

UNIT 1.1

Target Learning Objective Outcome Who? Keywords

State the role of the different groups involved in business activity and their objectives; consumers, employees, managers, owners, financiers and shareholders

Identify, describe and explain the objectives of different stakeholder groups

ALL

C

• Managers• Shareholders • Stakeholders• Suppliers

Explain the stakeholder role

Use examples to illustrate such objectives

MOST

B

SOME

A

1.2 The Organisation

28

What are stakeholders?

• People or organisations with a special interest in a business.

• This is normally because they are directly affected by the business and how it operates – both now and in the future.

29

Types of stakeholders

The government

The local community

Owners and

shareholders

Employees and

managers

CustomersFinanciers

Pressure groups

Suppliers Stakeholders

30

Power and influence

• Some stakeholders are powerful. They can influence how the business operates.

• Some stakeholders have little power. The business can virtually ignore their views.

31

Identify the powerful

Which three have the power?• An individual employee in a large firm• A bank which has lent a lot of money to a small

firm• A supplier of a major product, eg Microsoft• A small supplier to a large supermarket• An important customer of a small firm

33

Stakeholder interests All stakeholders have different types of interests:• Customers – price, quality, range of supplies,

opening hours, facilities, etc• Employees – pay, working conditions,

job security• Owners/shareholders – profit, share price,

dividends• The local community – road building, pollution,

safety, house values, jobs

34

Stakeholder interests

• Government – legal issues, environmental issues, competition

• Pressure groups – interests of members and those they represent

• Suppliers – price paid for their supplies, further orders

• Financiers – profits, return on money invested, repayments of loans

36

Conflict and stakeholdersConflict can arise in a business because stakeholder objectives are different.

• Local community against expansion of business, employees want job security

• Shareholders want high dividends, managers want to use profits for investment

• Suppliers want high prices for goods they supply, customers want low selling prices

37

Stakeholder summary

All stakeholders have an interest in a business.• Different groups have different interests• Interests may conflict• Business will be most likely to respond to

the most powerful groups

p

• A stakeholder is an individual or group that has an interest in decisions taken by a business.

• Sometimes stakeholders have the same interests, but their interests may also differ and conflict.

• Owners are very important stakeholders. They play a key part in setting up and ensuring the continual success of a business.

• Main stakeholders are owners, employees, customers, communities, government, pressure groups, trade unions and employer associations.

Target Learning Objective Outcome Who? Keywords

State the role of the different groups involved in business activity and their objectives; consumers, employees, managers, owners, financiers and shareholders

Identify, describe and explain the objectives of different stakeholder groups

ALL

C

• Managers• Shareholders • Stakeholders• Suppliers

Explain the stakeholder role

Use examples to illustrate such objectives

MOST

B

SOME

A

1.2 The Organisation

COMPLETE

PlenaryLevel achieved_____

What do you now know as a result of today’s lesson?

What are your areas for improvement? What are you going to do about this?

Unwrap the

‘present’ answer

the question

(teacher prepare before hand)

Target Learning Objective Outcome Who? Keywords

State the role of the government in influencing decisions within local, national and international contexts and explain how business may react

Identify need for intervention Show understanding of the impact of intervention in terms of business decisions e.g. what is produced and how Give examples of intervention both to support and control the impact of business activity on people, the economy and the environment

ALL

C

• Direct Tax• Fiscal Policies• GDP• Indirect tax• Inflation• Monetary

Policies• Money Supply• Public

Expenditure

Demonstrate an awareness of the impact that tax and interest rate changes might have on business decisions

Know how interest rates affect business Know how different tax changes affect business Understand how business decisions will be affected by such changes

MOST

B

SOME

A

1.3 Changing business environment

Starter Stars

Plan the starter for next lesson…

recapping this lesson

(e.g Mind map pg 25)