BUS - notes

• SMART


  • Specific
  • Measurable
  • Achievable
  • Realistic
  • Time-framed
• Different business objectives


  • Survival
  • Growth
  • Profit
  • Market share
• Main internal and external stakeholder groups

  • Shareholders/Owners
  • Workers
  • Managers
  • Customers
  • Government
  • Banks
  • Community
• Business objectives


  Aims and targets that a business works towards to help it run successfully
• Benefits of setting business objectives

  • Increases motivation
  • Easier and less time consuming decision making
  • Reduces conflicts and helps unite the business
  • Managers can compare performance to objectives and make changes
• Common private sector business objectives

  • Survival
  • Profit
  • Growth
  • Market share
  • Service to society
• Survival


  New or small firms usually have survival as a primary objective
• Profit


  Income of a business from its activities after deducting total costs
• Growth


  Measured by value of sales or output
• Market share


  Proportion of total market sales achieved by one business
• Service to society


  Some private sector operations like social enterprises aim to better the society rather than profit
• Why business objectives could change
• Motivation


  The reason why employees want to work hard and work effectively for the business
• Why people work


  • Have a better standard of living
  • Be secure
  • Gain experience and status
  • Have job satisfaction
• Importance of a well-motivated workforce

  Increases labour productivity, reduces absenteeism and labour turnover
• Maslow's Hierarchy of Needs


  Shows that employees are motivated by each level of the hierarchy going from bottom to top
• Levels of Maslow's Hierarchy

  • Physiological needs
  • Safety/security needs
  • Social needs
  • Esteem needs
  • Self-actualisation
• Limitation of Maslow's theory
• Taylor's Motivation Theory


  Workers are motivated by personal gains, mainly money, and increasing pay will increase productivity
• Herzberg's Two-Factor Theory


  People have two sets of needs: hygiene factors and motivators
• Hygiene factors


  • Status
  • Security
  • Work conditions
  • Company policies
  • Relationships
  • Salary
• Motivators


  • Achievement
  • Recognition
  • Personal growth
  • Promotion
  • Work itself
• Hygiene factors need to be satisfied, but don't act as motivators</b>
• Motivators will truly motivate workers to work more effectively
• Financial motivators


  • Wages (time-rate, piece-rate)
  • Salary
  • Commission
  • Bonus
  • Performance-related pay
  • Profit-sharing
• Time-rate


  Pay based on the number of hours worked
• Piece-rate


  Pay based on the number of output produced
• Commission


  Paid to salesperson, based on a percentage of sales they've made
• Bonus


  Additional amount paid to workers for good work
• Performance-related pay


  Paid based on performance assessed through appraisal
• Profit-sharing


  A scheme whereby a proportion of the company's profits are distributed to employees
• Piece-Rate


  Pay based on the no. of output produced
• Piece-rate, like time-rate, doesn't ensure that quality output is produced
• Efficient workers may feel demotivated in a piece-rate system as they're getting the same pay as inefficient workers, despite their efficiency
• Salary


  Paid monthly or annually
• The higher the sales, the more the pay in a commission system
• No sales made means no pay at all in a commission system, which can be very stressful for salespersons
• Performance-related pay


  Paid based on performance, assessed through an appraisal process
• Profit-sharing


  A scheme whereby a proportion of the company's profits is distributed to workers
• Workers will be motivated to work better so that a higher profit is made in a profit-sharing scheme