Setting Business Aims & Objectives (AQA GCSE Business): Flashcards
Exam code: 8132
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Define business aims.
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Cards in this collection (39)
Define business aims.
Business aims are the long-term goals or aspirations of an organisation.
Define business objectives.
Business objectives are the specific, measurable outcomes that a business hopes to achieve in a given time period.
What does SMART stand for when setting objectives?
SMART stands for Specific, Measurable, Achievable, Realistic and Time specific.
A measurable objective expresses the desired outcome in __________ terms.
A measurable objective expresses the desired outcome in quantitative terms.
True or False?
In a SMART objective, "achievable" and "realistic" mean the same thing.
False.
Achievable means it is possible with the people and resources involved. Realistic means it is possible within the set timeframe.
How can objectives motivate employees?
Workers can see how their hard work contributes to business success, and they may receive a financial reward for progress towards objectives.
How do aims and objectives help investors and other stakeholders?
They help stakeholders understand the direction the business is pursuing, so they can decide whether to align themselves with it.
How do objectives help managers when making business decisions?
Objectives help managers set priorities, so decisions with a direct impact on achieving objectives can be considered first.
______ is a common objective in the early stages of trading.
Survival is a common objective in the early stages of trading.
How do businesses often achieve growth?
Businesses often grow by increasing sales, persuading customers to buy more often or in greater quantities and appealing to new market segments.
Define market share.
Market share is the percentage of total market revenue that a single business or brand achieves.
What does a shareholder value objective aim to increase?
A shareholder value objective aims to increase the share price and the dividends paid to shareholders.
True or False?
Some business owners are happy simply to earn enough to live the lifestyle they want.
True.
Owners may aim for financial security, and satisficing may be enough for them to pursue their chosen lifestyle.
What are some examples of non-financial business objectives?
Examples include fulfilling personal ambitions, making a positive contribution to society and improving employee welfare.
How do the objectives of new businesses differ from those of established businesses?
New businesses are likely to prioritise survival, whilst established businesses are more likely to pursue growth.
How do the objectives of small businesses differ from those of very large businesses such as PLCs?
Small businesses often focus on the personal objectives of their owners, such as a good work-life balance. Very large businesses aim to satisfy the needs of their shareholders.
Non-profit organisations are likely to prioritise their ____ aims and objectives.
Non-profit organisations are likely to prioritise their social aims and objectives.
What five factors can cause objectives to vary between businesses?
Objectives can vary because of industry, size, culture, ownership structure and geographic location.
True or False?
A family-owned business may put long-term stability ahead of short-term profitability.
True.
A family-owned business may prioritise long-term stability and legacy, whilst a large public limited company is likely to focus on maximising shareholder value.
How can a business's culture influence its objectives?
A business with an employee-focused culture is likely to prioritise staff wellbeing, whilst a target-driven culture is more likely to focus on financial objectives.
Why do objectives often need to change as a business evolves?
Objectives often need to change so that the business remains competitive and profitable as it grows.
A business may decide to __ a market if it is not profitable.
A business may decide to exit a market if it is not profitable.
True or False?
A business only reduces its workforce when it is shrinking.
False.
A business may decide at any point to reduce its workforce to cut costs or streamline operations.
How can changing market conditions cause objectives to change?
Changes in competition, demand and consumer price sensitivity can shift objectives, for example from gaining market share to profitability as competition intensifies.
How can technology cause a business's objectives to change?
Technology can offer a more cost-effective way to reach customers, so a business may shift its focus from traditional shops to online retail.
How might poor performance lead a business to change its objectives?
If a business is not meeting its sales goals, it may change its objectives to improve its financial performance, which may involve retrenchment.
How can legislation cause a business's objectives to change?
A business may need to change its objectives to comply with new regulations or to take advantage of new opportunities created by changes in the law.
Why are financial measures useful for judging business success?
They are commonly used as metrics in business objectives, and managers' bonuses and commission can be linked to achieving them.
How is revenue calculated?
Revenue is calculated using this formula:
Revenue = Selling price × Number of items sold
How is profit calculated?
Profit is calculated using this formula:
Profit = Revenue − Total costs
True or False?
Falling profits always mean that a business's sales have fallen.
False.
Lower profits indicate either falling sales or rising costs.
Define market share.
Market share is the portion of a market controlled by a particular company, brand or product.
Market share = (Business sales ÷ Market sales) × 100
Define share price.
The share price is the current market value of one share in a business.
The share price of a public limited company is determined by _______________ on the stock exchange.
The share price of a public limited company is determined by supply and demand on the stock exchange.
Why do businesses generally want their share price to rise?
A rising share price is attractive to new investors.
What are four common non-financial measures of business success?
Common non-financial measures are social entrepreneurship, personal satisfaction, challenge and independence and control.
True or False?
A business set up to help others still needs a financial objective to succeed.
True.
Helping others still needs a financial objective behind it for a business to succeed and be sustainable.
Independence lets entrepreneurs do things their own way, which can be very __________.
Independence lets entrepreneurs do things their own way, which can be very motivational.
Why are larger businesses taking non-financial measures of success more seriously?
Some investors favour socially responsible businesses, supporting community causes brings positive public relations, and recognition as a good employer can aid recruitment.
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