3.1.

1 Understanding the
nature and purpose of
business

• Why businesses exist

• Business objectives such as profit, growth, survival, cash flow, social and ethical
objectives
• The relationship between mission and objectives
• Why businesses set objectives
• The measurement and importance of profit
• Revenue
• Fixed costs
• Variable costs
• Total costs

Starter – 3 quick questions

Definition: Business
Objectives

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S M A R T

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Example of a smart objective

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Business objective: Profit

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Business objective: Profit maximisation

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Business objective: growth

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Business objective: Survival

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Business objective: Cash flow

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Business objective: Social

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Business objective: Social

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Business objective: Social

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Business objective: Ethical

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Definition: Mission Statement

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Mission and objectives

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Mission and objectives (continued)

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Why does a business set objectives?

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Why does a business set objectives? (continued)

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Definition: Profit

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Total costs (TC)

Definition: Fixed Costs

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Examples of Fixed Costs (FC)

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Write the formula for calculating fixed costs in here:

Try the example:

Definition: Variable Costs

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Examples of Variable Costs (TVC)

Write the formula for calculating variable costs here:

Try the example:

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Definition: Revenue

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Examples of Sales Revenue

(SR)

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Write the formula for sales revenue in here:

Try the example:

Plenary Quiz

If TR = £21,000, TVC = £7,000 and TC are £11,000

a)What are the FC? £__________________

b)What is the P? £___________________

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 Sample
exam
question 1

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 Sample
exam
question 2

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 Objective

Social objective

Ethical objective

Revenue

Fixed Costs

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 Variable Costs

Profit

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