Forms of a business & its objectives

  • Created by: Izzie
  • Created on: 13-03-18 18:42
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  • Forms of a business & its objectives
    • Business Objectives are goals & targets needed to achieve progress
    • Initially the main objective at first is to survive. It may change to profit maximisation in the long term
      • For a small business survival may be the main objective
      • Larger businesses may want to maximise growth & mrkt share
    • Factors that determine objectives
      • Size & status
      • Employee welfare
        • looking after employee needs (e.g. wage)
      • Social objectives
        • benefit society
      • Importance of profit
      • Consumer pressure
      • Economic envt
    • Difficult trading conditions can alter objectives. This can be due to falling consumer spending (e.g. due to recessions in 2008-2012)
    • Shareholders may prefer profit maximisation as a way of increasing dividends
      • Profit provides security & retained profit can keep a business going if trade decreases
        • Retained profit can be used to fund investments for expansion
          • Maximising profits in short run can make it harder to maintain a strong mrkt position
    • Sales maximisation is an alternative to profit maximisation
      • Small businesses may be seen as risky but growth can bring stability
    • Liability- having responsibility for business debts
      • Limited Liability- company is responsible for debts but only loses original investment
    • Franchises are owned but operated by a franchisee but the franchisor retains some control
    • A social enterprise is a business aiming to fulfil a social/ environmental role
      • Exists to make a positive difference by tackling social problems

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