Unit 2.5

What is a Successful Business?

Winning 1st Prise

Getting the answer right

Being Rich?

Being

Happy

Having a Big House

How do we judge success?

Are we achieving our AIMS?

How do we judge success in business?

Is success only about making money?

Most businesses need to make a PROFIT to survive. People will only invest in a business they feel will obtain a satisfactory RETURN for their money.

Profit then is the MAIN objective of a business.

What are the main features of a successfully run business?

• Demand for the products is increasing

• Profits are rising from previous year

• Profits are better than the industry average

• Wage increases for workers However:

• Different businesses exist for different purposes

• Different businesses have different AIMS.

PUBLIC SECTOR

ORGANISATIONS controlled by the Government or Local Authority.

The Post Office, the BBC, local leisure centres and schools come into this category.

Main aim – to provide a service

PRIVATE SECTOR

ORGANISATIONS which are owned and run by private individuals, eg sole trader, companies, franchises.

Organisations such as the local corner shop, Marks and Spencer and McDonalds are in this category.

Main aim – to make a profit

VOLUNTARY SECTOR

ORGANISATIONS such as OXFAM and SAVE THE CHILDREN are charities.

Main aim – to help others

The main aim is to provide a service

Aims of Businesses in the Public Sector

eg The Post Office

Success for the Post Office would be measured in terms of whether it had

provided an efficient postal service for all UK residents

• Must use public money wisely

• Improve the quality of services offered

• Cut costs

• Raise revenue

Local Authorities

Aims of Businesses in the Public Sector

Makes decisions about what services are offered

Show residents that money is used wiselyGood quality services for the community• Local Authority funds are limited

• Can raise money by raising council tax

Must meet social responsibilities meeting the needs of all members of the community (young and old) and caring for

the environment

The main aim is to make a profit

Aims of Businesses in the Private Sector

Other Aims:

• Survival, Growth• Providing Customer Wants• Increasing Market Share• Social Responsibility• Increasing Returns to Shareholders• Improving Quality of Goods/Services

Sole Trader - making enough money to have a reasonable lifestyle whilst being in control of a business and enjoying his/her work

Aims of Businesses in the Private Sector

Partnership - make profits and survive, may wish to stay small, offering quality services at a competitive price while keeping control

Private Limited Company (Ltd) - make enough money to survive, pay appropriate wages, pay reasonable dividends, meeting social responsibilities, improving quality of goods/services, working efficiently

Public Limited Company (plc) - if it does not provide profits which allow shareholders to be paid dividends, then the business may not survive, may spend money on public relations activities

To be recognised as a charity an organisation must meet one of the following objectives

Aims of Businesses in the Voluntary Sector

• Relieve poverty• Advance education• Advance religion• Activities to benefit the community

Example - NCDL – raise funds to help as many animals as possibleObjectives: Help more animals

Maximise collections of cash

Recruit more helpers

Open more charity shops

Customers – consider needs/wants

Managers – decision making

Shareholders/Owners – need confidence to keep shares or invest more money

Providers of Finance – need confidence in business to lend money

Employees – committed, feel secure, motivated, valued

Suppliers – dependable and goods quality supplies

Government – legislation (inc taxation)

Community – need support and good public relations

Who Influences Success?

Banks/Investors – have an interest that the business is using its funds well

Employees – have an interest in the activity of a business, job security and future prospects

Shareholders – wish to see how a business performs in the hope that their investment increases

Inland Revenue – wish to make sure that tax rules are applied

Community – interested in the way a business in their area is operating

Suppliers – wish to know if they will be paid

Managers – want to ensure the business is running efficiently

A STAKEHOLDER is “a person or group of people who have an interest in a business and the way it is

run or managed

Who can STAKEHOLDERS be and why are they interested in the

running of a business?

Customers – buy their goods/services and are therefore affected by price variations

The Main Benefits of Business Success are:

SUCCESS

Living standards are raised

• Employment increased -> increased disposable income

• Charities benefit/more donations

Value for money product and services are available

•Businesses - bulk buying –> bigger discounts

•Customers – price reduced/quality improved

Employment is provided/Increased

• Job opportunities in area

• Overtime for employees

Wealth is created

• Increased orders to Suppliers

• Investment in community e.g. more businesses in area