Objectives Business Objectives Corporate Social Responsibility Businesses that are seen to be irresponsible tend to gain a bad reputation and can suffer from decreased sales as a result ID: 787282
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Slide1
Objectives
Understanding Business Higher Business Management
Slide2Objectives
Slide3Business Objectives
Slide4Corporate
Social Responsibility
Businesses
that are seen to be irresponsible tend to
gain a
bad reputation
and can suffer from
decreased
sales
as a result
Being responsible in business is very important
Slide5Profit Maximisation – what are the costs?
There are only 2 ways to maximise profit:
Making the maximum amount of profit is a main aim for many organisations.
Slide6Survival
Businesses exist to make a profit, but for some, simply surviving is more important.
Slide7Managerial Objectives
Large organisations
M
any managers
Some managers may choose to pursue their own aims
This might be to increase their own salary or promotion opportunities
Improving their own status
Businesses can benefit if the manager increases sales/profit
Slide8Satisficing
To ‘satisfy’: to aim for a satisfactory result, rather than an exceptional one
To make enough profit to keep shareholders/owners happy
NHS good example – they will aim to stay within budget, not to make drastic cuts
Slide9Business Growth
Why do businesses grow?
To avoid being a takeover target
To reduce the risk of business failure
To become the market leader
To increase profits
To remove a competitor
To be able to take advantage of economies of scale
Slide10Internal
Organic
Growth
Slide11Questions - 1
Why is it important for a Business to have objectives?
List 6 objectives a business may have.
How can Social Responsibility be in conflict with Profit Maximisation?
Why does a business want to grow?
Slide12Key Terms – Methods of Growth
Slide13Merger
This is when one firm
combines
with another
Slide14Merger
Slide15Takeover (Acquisition)
This is when one firm
takes control
of another – usually a larger business taking over a smaller one.
Slide16Takeover
Slide17Vertical Integration
Slide18Vertical Integration
Slide19Vertical Integration
Disney made films/products (Secondary) then decided to sell them directly rather than through other stores (Tertiary)
Slide20Diversification – Conglomerate Integration
This is when a business expands into markets different from its core activity
Mackie’s and
Taypack
Joint Venture
in 2009
1986
2004
2009
Slide21Questions - 1
What is the difference between a Merger and a Takeover?
Growth includes Vertical Integration. What is the difference between Horizontal and Vertical Integration?
What is Diversification?
Slide22Your Task
Try to find examples of the various types of Growth on your worksheet.
Look at Proctor & Gamble’s website.
Slide23Divestment
This is when a firm sells its
business assets
or
subsidiary companies
Focus on core activity
Obtain funds
Business may sell for more in ‘chunks’
Remove underperformance
Slide24Core Activity
Catering
Cleaning
Accounts
Recruitment of new staff
Outsourcing
Outsourcing is when an organisation
contracts
another to do work for them
Slide25Outsourcing
ADVANTAGES
Reduces cost of employing staff for non-core activities
Saves cost of specialist equipment
Allows firm to concentrate on their core activity
Specialist firm may produce goods at a lower cost
Specialist firm may have knowledge and skills to complete the job to a higher quality
Slide26Outsourcing
DISADVANTAGES
Slide27Questions – 2
What is Divestment?
What is meant by Outsourcing?
Slide28Key Terms
Download and read the Growth Key Terms document from
Edmodo
Using the links, or your own, list as many examples of each key term as you can
Be prepared to discuss the key terms and examples with others
Slide29The Private Sector aims:
Private Sector
Slide30Public Sector
The Public Sector aims:
Slide31Third Sector
The Voluntary Sector aim:
Slide32Explain
why a
Private Limited Company, like Bupa healthcare,
want to ensure it is providing
a quality service?(3 marks)
Compare
the objectives of a private sector organisation with
those
of
a public
sector organisation
.
(4 marks)
Slide33Slide34Slide35The better the service, the higher the price
Bupa can charge. This will lead to more income and therefore profits.
Increase profits can be invested into the business to further improve their services. For example, purchasing newer equipment, employing more staff, paying for staff training.
A better service means greater customer satisfaction. This can improve the reputation of the company, which can lead to more customer loyalty.
The better the service, the (
higher the price
Bupa
can charge.
This may lead
to more income and therefore profits
)
.
Increase profits can be
(
invested
into the business to further improve their services.
For example
, purchasing newer equipment, employing more staff, paying for staff training
)
.
A better service
means
(
greater
customer satisfaction
.
This can
improve the
reputation
of the company,
which can
lead to more
customer loyalty
)
.
Explain
why a
Private Limited Company,
like
Bupa
healthcare,
want to
ensure
it
is providing
a quality service
?
(3 marks)3
Slide36Private sector organisations’ objectives will focus on profit
maximisation
whereas public sector will require to operate within a specific budget
Private sector will focus on sales maximisation but public
sector organisations will focus on provision of a specific product or servicePrivate
sector organisations will be responsive to shareholders
’ opinions
however
public sector will have local or national
government priorities
and objectives
Both
will look to provide a quality
service
to ensure customers are satisfied
Compare
the objectives of a private sector organisation with those of a public sector organisation.
(4 marks)
4
Slide37Type of Business
Primary
Objective
Secondary
Objective
Private Limited Company
Survival
Profit
Maximisation
Public Limited Company
Profit
Maximisation
Growth
Franchise
Profit
Maximisation
Growth
Multinational
Growth
Profit
Maximisation
Government/Local Authority
Service Provision
Social
Responsibility
Public Corporations
Service Provision
Profit
Maximisation
Charity
Survival
Social
Responsibility