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GCSE Applied Business - Strand A Theory

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Strand A - Theory Aims and Objectives All businesses have aims and objectives. * An aim is a goal or target of the business. * Aims should be appropriate to the business activity and size * Businesses can have more than one aim * Businesses in the private sector aim to make a profit * Sometimes, when businesses are in trouble, they may aim to just survive * Businesses may aim to "maximise sales" this means to sell as much as they can. * Some more competitive businesses aim to provide a better, more effective service then competitors * Many businesses aim to be environmentally and ethically friendly. * Objectives are the steps that help to achieve an aim * Objectives should be measured regularly to check for achievement * Objectives should be SMART this means that they should be: Specific Measurable Agreed within the business Realistic Time constrained The objectives should clearly state what the business wants to achieve, the business should be able to measure whether or not they are achieving the objectives, all within the business must agree to work to achieve the objectives, the objectives must be able to be met with the resources available, the objectives must be able to be met within a certain time limit. If an objective has all of these features then they are SMART objectives. ...read more.


Private and Public Limited Companies Private and public limited Companies have limited liability so they can only lose their investment even if the company is in huge debt. These companies each have their own identities in law so legal action will be taken in the name of the company not of the owner. Both private and public limited companies employ the staff and own the assets, not the owners. Corporation tax is paid on the company's profits. These companies operate and keep working until they are formally wound up or until they go into liquidation. Companies go into liquidation when if you divide their current assets over their current liability, the answer in above 1 then the company is not liquid, however if the answer is below 1, the company is liquid, as the cash flow is negative and losses are being made. Private Limited Companies Private limited companies are suitable for family run businesses. The names of these companies end in "Ltd" to show that these are private limited companies. Private limited companies can be small and many are family firms with the shareholders being the family members. The shareholders are under the protection of limited liability, which means that they can only lose the amount of money they have invested regardless of how much money is owed. ...read more.


Secondary Businesses that manufacture goods Carpet, ship and computer makers, producers of electricity and builders of buildings. Tertiary Businesses that provide services to businesses or individuals Utilities & retail Location The location of a business can be very important. Today location matters less because of the development in technology and ICT but in some cases location must be considered very carefully. Factors that influence a location choice: * Labour * Premise costs * Financial assist and local government charges * Transport links * Near Customers * History and tradition * Sales techniques * Business activity * Number and location of competitors * Reliance on personal visits by customers * Reliance on local supplies * Reliance on specialised labour skills * Methods used to contact customers Passing trade, which is the public and potential customers, and rates, which tend to be higher in towns as opposed to outskirts, also affect the location choice. Positive effects of a good business location: * Additional sales opportunities, through passing trade and faster responses. * Increased income * Lower costs of running the business (e.g. rates) so reduced costs and higher profits. Relocating may be necessary if: * Competitors relocate (e.g. a new shopping centre opens/relocates) * Trades are diverted * Methods of making contact with customers change * Methods of production change, reliance on suppliers changes * Costs increase on premises and alternatives would save money. It is important to identify future changes that could affect future location choices. ...read more.

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