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
- Retained profit can be used to fund investments for expansion
- Profit provides security & retained profit can keep a business going if trade decreases
- 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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