All businesses want to make profit.
Typical business objectives:
- To make profit in order to survive
- Try to be biggest in market
- highest quality product possible
- Some may want to maximise sales
- Try to keep stability
- Expanding the business
- satisfying customers or helping the environment
Business create strategies
To meet their objective, they co-ordinate the activites of varies departments in order to try and achieve. The business will set itself a success criteria (targets to meet).
Measuring Business Success
Owners and Stakeholders want profit which measures there success
Profit= total revenue - total costs
success can be measured by job creation.
Important because it creates wealth in the economy and helps raise the standard of living. Impotant to workers as it creates stability. Linked to profitability.
Market share is also a measure of success
A business's market share= the business's sales/total sales in that market x100
Businesses want Positive Clash Flow
The supplier creates:
- Catalogue and price list - A list of products of sales. It is used by customers to decide what to order.
- Quotation- A statement by the supplier of what they intend to produce for the customer.
- Delivery Note- Sent by the supplier to prove the products have been delivered. Where possible the customer signs and returns a copy to the supplier.
- Invoice- A request for payment from the supplier to the customer. The details should match what was ordered and delivered. The customer usually has 30 days to pay the bill.
- Credit Note- issued by the supplier to reflect any differences between what was delivered to the customer and what was included on the invoices
- Receipt- sent by the supplier to the customer to confirm that the payment has been recieved.
- Statement of account- sent monthly to regular customers. It lists all the invoices that have been sent, how much money was recieved from the customer and how much the customer still owes the supplier.
- Order- A request from the customer to the supplier for goods which specifies the quantity, price and delivery requirements.
- Payment- A cheque or other payment method is sent by the customer to pay the invoice.
- Remittance Advice- sent by customer with their payment. It helps the supplier to know which invoice has been paid.