3.1

• Define Corporate objectives


  A organisations long term aims setting out its purpose
• Define Functional objectives


  Goals that an area of the business such as marketing or HR must achieve in order to contribute too achievement of its overall aim
• State Common Business Objectives

  • Profit Maximization
  • Meeting stake holders needs
  • Survival
  • Growth
  • Diversification
• Define Mission


  Describes the long term aims of a business
• Define Mission Statement


  A qualitative statement setting out a business's long term aims using emotive language to motive employees
• Define Price


  The amount paid by a consumer to purchase one unit of a product
• What does Price Represent

  Value

  Branding

  Quality

  Cost of Manufacturing

  Customer Service and after sales
• Define Revenue


  The income from an organisations activities

  Revenue = Price x quantity sold
• Define Fixed Costs

  Costs that do not vary directly with output in the short run
• Define Total Costs

  The sum of fixed costs and variable costs.

  Total Costs = Fixed costs + Variable costs
• Define Variable Costs

  Costs that vary directly with output in the short run e.g Raw Materials
• Define Profit

  Total revenue - Costs

  The difference between the income of a business and its total costs.
• Define Gross Profit

  Revenue - Cost of sales

  The difference between the income of a business and its total costs.
• Why is Profit Important to a Business?

  -To attract shareholders

  -Its a source of finance

  -Motivation

  -For Survival

  -As a Measure of Success
• Define Net Profit


  Gross profit - Expenses

  When the amount of income is larger than profit
• Define Retained Profit


  Profit that is reinvested back into the business
• Define Distributed Profit

  Profit that is distributed to shareholders by lTD's and PTC's in the form of dividence
• What is the Private Sector?

  Run by individuals

  aim to make a profit

  often start out small
• What is the Public Sector?

  Financed by the government

  e.g. Education, Health care, Police force
• What Is the Voluntary Sector?


  The voluntary sector consists of non profit and non governmental.

  organisations such as the Trade union or charities.
• What is a Sole Trader?


  A business that is owned and run by a single individual
• What is a Private Limited Company (LTD)?

  A small to medium sized business that is usually run by a family or a small group of individual's who own it.
• What is a Public Limited Company (PLC)?

  A business with limited liability, and a share capital of over £50,000 and at least two Share holders.
• What is Unlimited Liability?


  A situation where the owners of a business are liable for all the debts that the business may incur.
• What is Limited Liability?


  A situation where the Share holders arre legally responsible for the debts of a company however there personal belongings cannot be taken
• What is Share Capital?

  Money given to a company from Shareholders in return for a share certificate that gives them part ownership of the company.
• What is Dividends?


  A payment made by a company to its shareholders out of profits earned.

  When a company earns a profit it can reinvest or give to shareholders.
• What is Peace Rate?

  Paid or how much you produce
• What is the Public Sector?

  -Owned and mostly financed by the government --Provides essential services such as education healthcare, police, Education.
• What is Private Sector?


  -Run by individuals

  -Most of the businesses aim to make a profit and start out quite small
• Private Sector


  Unincorporated - Sole Trade, Partnership

  Incorporated - Private Limited Company, Public Limited Company.
• Features of a Sole Trader

  -Finance is From the owner

  -Owned by one person

  -has unlimited liability because the owner will be liable for any debts that occur
• Advantages of a Sole Trader

  -Easy and cheap to set up

  -Straightforward

  -Independence

  -Owner takes all the profit and there is good motivation

  -More Privacy

  -Main Objective is survival
• Negatives of a Sole Trader

  -Unlimited Liability

  -Difficulties when the owner wishes to go on holiday or is ill

  - Limited skills as the owner needs to be multi skilled.
• Advantages of a Private Limited Company (LTD)

  -More Flexible than a plc

  -It is only needed to release small amounts of financial information

  - Better Access to Capital than unincorporated businesses
• Disadvantages of a Private Limited Company (LTD)

  -Shares are less attractive as they cannot be sold on the stock exchange

  -could be difficult to raise finance than a PLC.

  -There are more legal formalities than for an unincorporated business.
• Advantages of a Public Limited Company (PLC)

  -Easier to raise a finance as a result of its stock exchange listing

  -Suppliers are more willing to offer credit to public limited companies.

  -Limited liability
• Disadvantages of a Public Limited Company (PLC)

  -Loss of control as the business goes from family ownership to the responsibility of shareholders.

  -The business is liable to scrutiny by the financial press.

  -Significant Administrative expenses
• What is ordinary share capital?

  this is money given to a business in return for partial ownership of the company.
• Disadvantages of Dividends.


  Dividends are not guaranteed the business must pay all its liabilities first, then it must decide what to do with the profits.