A-level Business notes

Unit 1: What is a business?

Nature and purpose of a business
1. What is a business?
A business is an organisation set up by an entrepreneur with the aim to make a profit by selling either goods
or services.

2. Why do businesses exist?

- To make a profit
- To benefit community/stakeholders
- To fill a gap in the market that has been identified.

MISSION: The overall general aim of a business.

OBJECTIVE: Step by step individual SMART aims that fulfil each sub-task required to reach the mission.
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HOW A BUSINESSES WORKS:

OBJECTIVE

STRATEGY

OPERATIONS FINANCE PEOPLE MARKETING

AIMS/MISSION → OBJECTIVE → BUSINESS STRATEGY → FUNCTIONAL STRATEGY → DELEGATED DECISION MAKING

COMMON BUSINESS OBJECTIVES:

 Profit optimisation
 Profit maximisation
 Growth
 Cash flow
 Survival
 Social / ethical

Companies may not want to use profit maximisation because it may result in consumer and worker backlash. It can
also have higher tax implications.

A new company would want to set an objective of survival because it is a realistic and achievable goal. They will have
to put in an investment and potentially borrow money so any profit related goals will not be achievable within the
first year.