Unit 2.5

1. Unit 2.5 What is a Successful Business?

2. How do we judge success? Having a Big House Winning 1st Prise Getting the answer right Being Happy Being Rich?

3. How do we judge success in business? Are we achieving our AIMS? 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.

4. 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.

5. 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

6. 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

7. VOLUNTARY SECTOR • ORGANISATIONS such as OXFAM and SAVE THE CHILDREN are charities. Main aim – to help others

8. Aims of Businesses in the Public Sector The main aim is to provide a service 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

9. Aims of Businesses in the Public Sector Local Authorities Makes decisions about what services are offered Show residents that money is used wisely Good 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

10. Aims of Businesses in the Private Sector The main aim is to make a profit • Other Aims: • Survival, Growth • Providing Customer Wants • Increasing Market Share • Social Responsibility • Increasing Returns to Shareholders • Improving Quality of Goods/Services

11. Aims of Businesses in the Private Sector Sole Trader - making enough money to have a reasonable lifestyle whilst being in control of a business and enjoying his/her work 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

12. Aims of Businesses in the Voluntary Sector To be recognised as a charity an organisation must meet one of the following objectives • Relieve poverty • Advance education • Advance religion • Activities to benefit the community • Example - NCDL – raise funds to help as many animals as possible • Objectives: Help more animals • Maximise collections of cash • Recruit more helpers • Open more charity shops

13. Who Influences Success? 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

14. 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 A STAKEHOLDER is “a person or group of people who have an interest in a business and the way it is run or managed Shareholders – wish to see how a business performs in the hope that their investment increases Managers – want to ensure the business is running efficiently 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 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

15. 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 SUCCESS • Value for money product and services are available • Businesses - bulk buying –> bigger discounts • Customers – price reduced/quality improved • Living standards are raised • Employment increased -> • increased disposable income • Charities benefit/more • donations The Main Benefits of Business Success are: