EDEXCEL GCSE BUSINESS · PAPER 1
Business aims and objectives
Putting a business idea into practice · Lesson 1 of 5
Teacher copy - includes the notes for whoever is teaching from it.
Last Chapter
Answer from memory before the answers appear.
1. Name the four customer needs.
Price, quality, choice and convenience.
2. What is the difference between primary and secondary research?
Primary is new, first-hand information; secondary already exists.
3. Name the five ways to segment a market.
Location, demographics, lifestyle, income and age.
4. Give one limitation of a market map.
A gap may have no demand, only two features are shown, or positions are based on opinion.
Learning Objectives
1. Explain the difference between business aims and objectives.
2. Explain the financial aims and objectives of a business: survival, profit, sales, market share and financial security.
3. Explain the non-financial aims and objectives: social objectives, personal satisfaction, challenge, independence and control.
4. Explain why aims and objectives differ between businesses.
Aims and Objectives
An aim says where a business wants to go; its objectives are the steps that get it there.
▸ Aim. A general, long-term goal the business wants to achieve, for example "to become the most popular café in town".
▸ Objective. A specific, measurable target that helps achieve the aim, for example "to increase sales by 10% within 12 months".
▸ SMART objectives. Good objectives are Specific, Measurable, Achievable, Realistic and Time-bound, so the owner can tell whether they have been met.
▸ Why set them. Aims and objectives give the business a direction, motivate staff, help with decisions and let the owner measure success.
Setting the Direction
|
Before a business opens its doors, its owner has to decide what it is for. Is the first goal simply to survive the first year? To make as much profit as possible? To help the local community? The answer shapes every decision that follows. |
Aims and objectives turn a business idea into a plan. |
PART ONE
Financial Aims and Objectives
Goals that are measured in money.
Financial Aims and Objectives
|
Survival Staying in business, especially in the first year or two when many new businesses fail. |
Profit Making revenue greater than costs - the reward for the owner's risk. |
|
Sales Increasing the number of products sold, or the value of sales (revenue). |
Market share Increasing the business's percentage of the total sales in its market. |
|
Financial security Having enough money to cover costs and unexpected problems, so the owner is not worried about paying bills. |
|
Understanding the Financial Aims
Which financial aim matters most depends on the business's situation.
▸ Survival first. A brand-new business, or one facing a new competitor or a recession, may simply aim to survive.
▸ Profit. Once it is established, most owners want profit - to reward themselves and to reinvest.
▸ Sales and market share. A business may aim to grow sales even at the expense of short-term profit, to beat competitors and become well known.
▸ Market share formula. Market share (%) = (the business's sales ÷ total market sales) × 100.
▸ Financial security. Building up savings and cash so the business, and the owner's income, are safe from surprises.
PART TWO
Non-financial Aims and Objectives
Goals that are not measured in money.
Non-financial Aims and Objectives
|
Social objectives Doing good for society or the environment, such as helping the local community or reducing waste. |
Personal satisfaction The pride and enjoyment of doing something worthwhile and doing it well. |
|
Challenge Testing yourself by building something new and overcoming problems. |
Independence and control Being your own boss and making your own decisions. |
Business With a Purpose
|
Some businesses are set up mainly for social objectives. A social enterprise sells products like any other business, but uses its profits to help people or the environment - for example by training young people who struggle to find work. |
A social enterprise: a business run to help people, not only to make money. |
Case Study
|
CASE STUDY The Big Issue: A Social Objective The Big Issue was launched in 1991 by John Bird and Gordon Roddick to help people who were homeless earn a legitimate income. Vendors buy copies of the magazine and sell them on the street at the cover price, keeping the difference. The business still needs to cover its costs, but its main aim is social: giving people a way to work their way out of poverty. |
|
1991 The Big Issue launched |
Social Its main aim: helping vendors earn an income |
Why Aims and Objectives Differ
No two businesses have exactly the same aims.
▸ Size. A small business may aim to survive or give its owner independence; a large one may aim for market share.
▸ Age. A new business usually aims to survive; an established one aims for growth and profit.
▸ The owner's priorities. Some owners want to make as much money as possible; others want a good work-life balance or to help their community.
▸ Type of business. A social enterprise puts social objectives first; a company owned by shareholders puts profit first.
▸ Competition. A business in a fiercely competitive market may have to focus on survival or keeping its market share.
Financial or Non-financial?
|
FINANCIAL AIMS |
NON-FINANCIAL AIMS |
|
▸ Survival. ▸ Profit. ▸ Sales. ▸ Market share. ▸ Financial security. |
▸ Social objectives. ▸ Personal satisfaction. ▸ Challenge. ▸ Independence and control. |
Key Terms
|
Aim A general, long-term goal a business wants to achieve. |
Objective A specific, measurable target that helps a business achieve its aim. |
|
Survival Continuing to trade rather than closing down. |
Market share The percentage of total sales in a market made by one business. |
|
Financial security Having enough money to cover costs and deal with unexpected problems. |
Social objective An aim to help society or the environment. |
|
Social enterprise A business whose main aim is social, using its profits to do good. |
|
Your Task: Whose Aims Are These?
10 minutes
|
For each business, decide on its most likely main aim and explain why - a market stall that opened last month; a café run by a charity that trains young people; a gym chain with 200 branches; a freelance web designer who left a stressful office job. 1. Name the most likely main aim. 2. Say whether it is financial or non-financial. 3. Explain why it suits that business. |
A good answer shows: A named aim for each business, with a reason linked to its size, age, type or owner.
Note: Look for the link to the business's situation - "because it's new" or "because the owner wanted a better work-life balance".
Can I...?
☐ Explain the difference between an aim and an objective.
☐ Explain the five financial aims.
☐ Explain the four non-financial aims.
☐ Calculate market share.
☐ Explain why aims differ between businesses.
Summary
✓ Aims are long-term goals; objectives are specific, measurable targets.
✓ Financial aims: survival, profit, sales, market share and financial security.
✓ Non-financial aims: social objectives, personal satisfaction, challenge, independence and control.
✓ Aims differ with the size, age and type of business and the owner's priorities.
|
EXAM FOCUS Explain one reason why the aims of a new business might be different from the aims of an established business. (3 marks) Name the difference, then explain why the business's situation causes it - a new business has few customers and little cash, so survival comes first. |
Exam Practice: Business Aims and Objectives
Answer all questions. Show your working in calculations. · 20 minutes
▸ Question 1 · 1 mark · State. State one non-financial aim of a business.
▸ Question 2 · 1 mark · Define. Define the term 'market share'.
▸ Question 3 · 2 marks · Calculate. A bakery's sales last year were £180,000. Total sales in its local market were £1,200,000. Calculate the bakery's market share. You are…
▸ Question 4 · 2 marks · Outline. Outline one financial aim a new business might have.
▸ Question 5 · 3 marks · Explain. Explain one reason why the aims of a new business might be different from the aims of an established business.
Question 1 · 1 mark · State
|
“State one non-financial aim of a business.” |
HOW TO ANSWER IT Command word: State. Worth 1 mark, so plan before writing.
Question 1 · mark scheme
1 mark available. Award a mark for each point made.
▸ Any one of: social objectives; personal satisfaction; challenge; independence; control. 1 mark
▸ Model answer. Independence.
Question 2 · 1 mark · Define
|
“Define the term 'market share'.” |
HOW TO ANSWER IT Command word: Define. Worth 1 mark, so plan before writing.
Question 2 · mark scheme
1 mark available. Award a mark for each point made.
▸ A business's sales as a percentage / proportion of total market sales. 1 mark
▸ Model answer. The percentage of total sales in a market that is made by one business.
Question 3 · 2 marks · Calculate
|
“A bakery's sales last year were £180,000. Total sales in its local market were £1,200,000. Calculate the bakery's market share. You are advised to show your working.” |
HOW TO ANSWER IT Command word: Calculate. Worth 2 marks, so plan before writing.
Question 3 · mark scheme
2 marks available. Award a mark for each point made.
▸ Correct method: (180,000 ÷ 1,200,000) × 100. 1 mark
▸ Correct answer: 15%. 1 mark (award 2 marks for the correct answer with no working)
▸ Model answer. (£180,000 ÷ £1,200,000) × 100 = 15%
Question 4 · 2 marks · Outline
|
“Outline one financial aim a new business might have.” |
HOW TO ANSWER IT Command word: Outline. Worth 2 marks, so plan before writing.
Question 4 · mark scheme
2 marks available. Award a mark for each point made.
▸ A financial aim identified: survival / profit / sales / market share / financial security. 1 mark
▸ Developed: why a new business might have it. 1 mark
▸ Model answer. Survival (1), because many new businesses fail in their first year, so the owner's first goal is to cover costs and keep trading (1).
Question 5 · 3 marks · Explain
|
“Explain one reason why the aims of a new business might be different from the aims of an established business.” |
HOW TO ANSWER IT Command word: Explain. Worth 3 marks, so plan before writing.
Question 5 · mark scheme
3 marks available. Award a mark for each point made.
▸ A reason identified, e.g. new businesses aim to survive / established ones aim for growth or profit. 1 mark
▸ First linked point of explanation. 1 mark
▸ Second linked point of explanation. 1 mark
▸ Model answer. A new business is more likely to aim for survival (1). It has few customers and little money set aside, so it may struggle to cover its costs in the first months (1). An established business already has loyal customers and a steady income, so it can aim for profit or growth in market share instead (1).