L2 Business Enterprise/ICTUnit 2 Business Organisations

Setting Aims and Objectives

Aims and ObjectivesTo understand a businesses situation and needs.

To be able to decide set aims and objectives for a business based on its situation and needs.

Focus of Aims and Objectives for a BusinessSurvival = Keep on trading

Break even = costs and income the same

Diversifying = moving into other markets/ Service Provision

Consolidation = merging

Expansion = growing the business

Market Share

Sales

Profit maximisation

Survival

A business needs to survive.

51% of new businesses fail in a year. Source http://www.businessplan.co.uk/why_do_business_fail.html

Many more fail between years 1-5

Reasons

Come up with Aim to help survival

Break even When costs and income

are the same

Realistically can be long process

Aim for the business to break even by 2014

Need

Customers

Marketing strategy

Price products/services correctly

Know market

Be lucky

Work ON business

Come up with an Aim for breaking even

Diversifying Moving into new markets

Improving current service provision

Aim ‘To diversify and increase product range from telephones to laptops and consoles within 3 months’

Can be a survival tactic

Can be expansion tactic

Tesco’s Groceries – Clothes – Bank – insurance Phone – Internet shopping

Tesco’s now going into Asia in big way

China, Thailand

An Aim for diversifying

ConsolidationForming relationships with other businesses

Aim to increase our market share by 30% to 60% by joining with….. Next year

Can be partnership or buyout

T-Mobile and Orange

Lowers costs (operating costs)

Share customers

An Aim for Consolidation

ExpansionGroupon worlds fastest grown company*

Launched 2008

Group Discount

Floated on stock exchange 2010

Gone global operates in 44 countries

In trouble now though…

An Aim for Expansion

Market ShareAim to increase Market Share

Aim to increase our market share from 20% to 25% in 2013

Makes you safer if you increase it

Take customers from competitors

Create new customers

An Aim for increasing market share

Sales Increasing sales

Can be specific – “Need to sell 10% more Sony TV’s this month than last month”

Can be general – “Need to increase sales by 10% throughout the store”

Has many benefits

Confidence for employees/owners

Increases revenue/profit

Scares competition

Profit MaximisationMake the most of what you have

Extracting as much money as you can from products/services

Focus on individual deals rather than bulk (sales)

Focus on Bulk orders (lowering costs)

Lease underutilized resources

Make cash flow work

Class Exercise In groups of three, come up with

1 Aim and 2 Objectives for each of the business goals to the right

They are for a business that has not began trading yet.

You need good reasons/justifications for your choices.

Make them SMART!

Specific

Measurable

Achievable

Realistic

Time bound

Survival = Keep on trading

Break even = costs and income the same

Diversifying = moving into other markets/ Service Provision

Consolidation = merging

Expansion = growing the business

Market Share = getting bigger share of the market

Sales = increasing numbers

Profit maximisation = Getting the most out of your resources