Thursday, 19 April 2012

Revision Diary 4 - The changing business aims and objectives of a growing business

In 2008 Vodafone was voted top company in a new set of AWARDS that had been running for just five years.  The ACCOUNTABILITY RATINGS measure how responsible companies are in the way they do business.  In particularly they look at how they have a positive impact on the societies and environments in which they operate.

Q.How would you rate the areas that they are trying to be responsible in the link above?

Vodafone operates with an annual TURNOVER of over £5bn per year.  From the link above we can see that it is achieving one of its AIMS which is linked to Corporate Social Responsibility.

The top 10 companies in the 2008 Accountability Rating are reckoned to be the most environmentally aware in the world.  They include Vodafone, General Electric, HSBC, France Telecom, HBOS, Nokia, EDF, BP, Royal Dutch Shell. 

Q. How do you think that they use it to their advantage? 

Changing Aims
As a business grows its aims and objectives are likely to change from survival, break even or making a modest profit. Once it achieves this like you it wants to set itself new aims that may be harder to reach and take longer to achieve like increasing market share, supporting charities or being environmentally friendly and ethical.

Why grow?
Some businesses never grow because the serve a small market like the 'corner shop' or offer a bespoke service to a 'niche' market.  Others aim to grow to increase their share of the market, compete more effectively and perhaps take some market share from their rivals and protect them from the competition.  As it grows it might find that their initial or 'home market' is no longer big enough to SUPPORT their plans for GROWTH so will look for ways to EXPAND elsewhere.  It can either expand through DIVERSIFICATION, moving into markets with other products or into other markets all together different from its current one.  Diversification may keep it in similar markets, or it may move into completely new ones

Market dominance
By AIMING to become a lead player in a particular market you will eventually become the DOMINANT BUSINESS in that market.  The advantages it gives over your competitors are:
  • you become the preferred business of suppliers and of retailers
  • the leading brand and therefore the best known business in that particular market
  • you may be able to put pressure on suppliers to keep prices low or prevent other competing too
Overseas expansion
If a business moves into overseas markets it will face new competition, language barriers, different laws and regulations, different transport problems and locations and a greater need to employ local staff.  Each of these needs to be addressed with new aims and objectives to ensure that the business is competing effectively, efficiently and legally

Ethics
A growing business needs to consider the ethical 'doing the right thing' and environmental ' not harming the places or communities where it works' in to consideration when it trades. It can measure this by reducing its 'CARBON FOOTPRINT' This is often in contrast to its main aim of making money but by doing so in a way that minimises any negative impact and maximising the positive benefits on people and the planet.

Quick Quiz - Aims and Objectives
  1. List the aims of a start up business
  2. List the likely aims of a growing business
  3. What is meant by diversification?
  4. What is market dominance?
  5. Give TWO possible new responsibilities of a growing business
  6. List TWO possible advantages of moving into an overseas markets
  7. Explain what is meant by 'ethics'
  8. Why is an ethical approach important to some businesses?
  9. What is a 'carbon footprint'
Worksheets
aims and objectives
business objectives - non financial
business objectives - financial

9 mark question

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