UNIT 2.5UNIT 2.5

What is a Successful Business?What is a Successful Business?

Measurements of SuccessMeasurements of Success

Different types of business will have different Different types of business will have different ways of measuring success – could be:ways of measuring success – could be:

Achieving profitsAchieving profits Achieving the aims of the organisationAchieving the aims of the organisation Survival of the businessSurvival of the business To be independentTo be independent To improve product/serviceTo improve product/service Achieving good sales figuresAchieving good sales figures Having good relationships with stakeholdersHaving good relationships with stakeholders Leading the way with innovationLeading the way with innovation Achieving growthAchieving growth Having a large market shareHaving a large market share To provide employmentTo provide employment

Advanced ObjectivesAdvanced Objectives

Once an organisation has Once an organisation has achieved some measure of achieved some measure of success, it may have additional, success, it may have additional, advanced objectives eg:advanced objectives eg:

to to sustainsustain growth growth To increase market shareTo increase market share To have an easily-recognisable To have an easily-recognisable

brandbrand

Types of OrganisationTypes of Organisation

Sole TraderSole Trader PartnershipPartnership Private limited companyPrivate limited company Public limited companyPublic limited company CharityCharity Co-operativeCo-operative FranchiseFranchise Voluntary organisationVoluntary organisation

Measuring SuccessMeasuring Success

This will vary depending on the type of This will vary depending on the type of organisation For example:organisation For example:

A profit-making business might use its actual A profit-making business might use its actual value of profit and compare it with other years value of profit and compare it with other years or other similar businessesor other similar businesses

A charity might measure its success by the A charity might measure its success by the amount of aid given to its chosen cause (eg amount of aid given to its chosen cause (eg Oxfam may decide it is successful if it can Oxfam may decide it is successful if it can provide enough aid to famine-hit areas)provide enough aid to famine-hit areas)

A public sector organisation may measure its A public sector organisation may measure its success on the way in which it has used its success on the way in which it has used its funding (eg a state-run nursery may decide it funding (eg a state-run nursery may decide it has been successful if it provides adequate has been successful if it provides adequate care for a large number of children)care for a large number of children)

StakeholdersStakeholders

These are the people/organisations These are the people/organisations who invest or have an interest in an who invest or have an interest in an organisationorganisation

Many different types of stakeholder Many different types of stakeholder depending on the type of depending on the type of organisationorganisation

For example, owners, shareholders, For example, owners, shareholders, managers/directors, employees, managers/directors, employees, debtors, creditors, customers, debtors, creditors, customers, Government (tax and law), suppliers, Government (tax and law), suppliers, local community, trade unions, EUlocal community, trade unions, EU

Conflicting Interests of Conflicting Interests of StakeholdersStakeholders Stakeholders in an organisation have Stakeholders in an organisation have

different expectationsdifferent expectations Customers want the best prices with Customers want the best prices with

good quality productsgood quality products Shareholders want large profits, stability Shareholders want large profits, stability

of the business, increasing share valueof the business, increasing share value Employees want job security and Employees want job security and

promotion prospectspromotion prospects Local community wants provision of jobs, Local community wants provision of jobs,

clean/safe environmentclean/safe environment Suppliers want prompt payment, regular Suppliers want prompt payment, regular

ordersorders

ShareholdersShareholders::

Have an interest in how their shares are Have an interest in how their shares are performing and therefore an interest in how performing and therefore an interest in how the business is performingthe business is performing

Private limited company shareholders can Private limited company shareholders can be more flexible and supportive as they are be more flexible and supportive as they are usually family, employees or friends want usually family, employees or friends want the firm to do well in the long termthe firm to do well in the long term

Public limited company shareholders are Public limited company shareholders are usually more detached from the business usually more detached from the business and are only interested in share prices and and are only interested in share prices and the dividends they will receive.the dividends they will receive.