Why is it important for businesses to set aims and objectives
A business aim is a target to reach, all businesses have aims, but they need to be monitored to see if they are being reached. Adrian’s main aim was to keep his business up and running for its first few months of opening. To this he needed to advertise his business, he decided to put on special offers to attract customers. This is important to keep the money coming in, as he needs to pay tax on his vehicle and pay for any maintenance. Adrian’s other main aim was to get as many customers booked for a lesson as possible. He advertised in the form of leaflets and in the newspaper. The more customers he gets then the more profit he will get. Adrian need to keep advertising as much as he can. He puts money aside to spend on his advertising work. For example if he puts £15 into advertising a week then he would need a £45 back in profit, to make it worthwhile. If he achieves less than £45 profits back a month then he needs to rethink his approach for advertising his business.
Show how successful Gunner Pass is in meeting theses aims and objectives
One of Adrian’s aims was to make as much profit as possible. He needed to keep track of his finances to see if his aims are being met. If his aims are being met then he may decide to increase his advertising or type of advertising. Adrian’s business has survived for a successful nine months, so he has achieved his aims of surviving his first few weeks. He is also achieving his aim of advertising as much as he can, as regular adverts have been appearing in the local paper. When his adverts have been in the paper the number of customers has increased by 30%. By advertising is it clear that Adrian has gained more customers. Also by advertising Adrian has noticed a significant increase in his profits. Adrian must ask his customers how they came across Gunner Pass. When a new customer is in contact with me, I always ask how they heard of my business. I need to do this to find the most effective way of advertising. Most of his customers heard of Gunner Pass through the local paper, but a few have been to previous customers spreading the word. This shows Adrian’s customers are happy with the service he is providing.
Explain why the type of ownership is suited to Gunner Pass
Gunner Pass is a sole trader. Adrian is the business. He chose to become a sole trader as he had never run a business before. The ownership suits Adrian, as he wanted the luxury of keeping all his profit. Keeping and spending his profit was the main reason for starting his business. He also enjoys what he does in his job, as he enjoys teaching his customers to drive. Adrian has a family to support, so making as much profit was important, but also risky, as he has no past experience. In the future if Gunner Pass is still running well and is successful, Adrian may think to expand and become a Ltd. (private limited company). Becoming a Ltd. will mean much more paper work. Adrian will have to be working more hours in order to maintain the business. Becoming a Ltd. is a big step for any business. Adrian will need to obtain a Memorandum of Association. This shows the company name, the address where the business is controlled and the type of activity the business runs, either (primary, secondary, tertiary). If he becomes a plc he will have to hold a regular Annual General Meeting (AGM). The AGM is a meeting where all people involved in the business come together and discuss the business. The Directors tell the shareholders what their aims are for the next year. The shareholders will either agree or disagree. If the shareholders feel you are doing a bad job then they can sack you. This means the person who started and brought the business up could no longer be part of the business. Adrian has no future plans to become a plc. If he does he will need to expand the business as a whole. For example he will need more cars and more employees.
Suggest how and why the ownership and aims and objectives of Gunner Pass may need to respond to a change in business activities
Recently the bank of England raised interest rates by a ¼. Due to this the public will be paying around £20 per year more on their mortgages. This rise will almost have no effect on most people. Due to this some customers may not be prepared to spend as much money on driving tuition. Adrian may need to reduce his prices if he is to keep a constant supply of customers. Because he had an aim of getting as many customers as possible it is likely he will reduce his prices, or he could maybe put an offer on or special discounts to attract more customers. If more driving schools are set up in the area, then Adrian will have his first competition. Adrian will need to rethink his objectives. He may want to advertise more to encourage more customers to go to him rather than his rival. He may lower his prices drastically to gain almost all the people wanting to drive, to try and put the other driving school out of business. In the UK, the economy is growing at a slow rate of around 2.5% every year. This means that Adrian may be getting more customers approaching him, who are willing to spend money. Adrian needs and wants to get as much profit as possible, so he may tell his customers to pass on the word of Gunner Pass, and if they do give them a discount from their lessons. The customers will only tell family or friends about Gunner Pass if they are satisfied with the service he gave. He must also be concentrating on his teaching style, and the amount of customers who pass their test. In the future if Gunner Pass is running smoothly and is in no danger of closing down, he may want to become a Private Limited Company (Ltd.). If he does he will need to employ one or maybe two instructors so he can keep in control of the customers. His employees will need to be paid, so he will need money aside every month to assure his employees are happy. By becoming an Ltd he will need to be working longer hours, to keep control of finances and the ownership of the business. If he becomes an Ltd he will need to change his objectives in order to stay running. He will have to do this because his business will be on a much larger scale. He will need to employ more employees, in order to keep up with the flow of customers, and keep up to date with paper work. His objectives will need to be profit based if he becomes a Ltd. This is because he has to pay wages for the first time to his colleagues. He will need to invest more capital into Gunner Pass to keep it up and running as an Ltd. Making the step from a sole trader will be a big one for Adrian as Gunner Pass is the first business he has run, so he will have little or no experience of being a Limited Company.
Cummins UK
Main activities of Cummins
The second business being researched is Cummins. Cummins Inc, is a global power leader. It’s a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins serves its customers through more than 500 company-owned and independent distributor locations in 131 countries and territories. With 23,700 employees worldwide, Cummins reported sales of $5.9 billion in 2002. Cummins has many worldwide locations across all the continents. Cummins makes and distributes engines all across the globe. Cummins is in the secondary sector as it manufactures goods and sells them on to tertiary businesses. The UK sector of Cummins mainly produces diesel engines and parts, and distributes them across the world. I am researching the UK sector of Cummins. The UK sector is a Private Limited Company. (Ltd).
Main features of ownership
Cummins is a Private Limited Company (Ltd). Private limited companies are generally smaller than public limited companies. A limited company is a business, which is owned by shareholders and run by directors. Shareholders are people who have invested money in the company. In return for this they receive money back in the form of dividends. Directors control the management of the business. The directors usually own shares in the business. Shareholders will appoint directors to run the business. A limited company has limited liability, this is important for shareholders because if the company become bankrupt, then they will lose the money they have put into the company. However they won’t be forced to sell off their personal possessions to pay the company debts. Below are the Cummins board of Directors these are the main people who run and manage the business.
Main aims and objectives
An aim is what a business sets out to achieve. An objective is a target, which helps a business achieve its aim. Many objectives relate to sales and financial performance because profit and competitive position are important business aims, for example the business will increase sales by 30% in the coming year. Cummins has an environmental mission. A business may decide to have an environmental mission to boost its reputation, as the public and environmental groups such as Greenpeace will hopefully support the ideas. If Cummins was found to be releasing unwanted chemicals into the environment then an organisation like Greenpeace will be likely to take action. Any action may be in the form of protests or possibly legal action.
Cummins has a mission statement, a mission statement is a formal statement setting out the aims of the business. Cummins’ mission statement and environmental mission are below.
Cummins Mission Statement
- Motivating people to act like owners working together.
- Exceeding customer expectations by always being first to market with the best products.
- Partnering with our customers to make sure that they succeed.
- Demanding that everything we do leads to a cleaner, healthier, safer environment.
-
Creating wealth for all stakeholders.
Cummins Environmental Mission
Cummins provide the technologies that power the world and support its economies. They conduct their business with the consent of society and strive to improve the quality of life for all people. Cummins demand that everything they do leads to a cleaner, healthier, safer environment. In fulfilling this mission, they will:
- Develop superior products that continually meet or exceed emissions and noise regulations while improving fuel economy.
- Exercise global citizenship
- Make the environment part of their business everywhere where they operate or distribute their products.
- Evaluate and report their progress against stated goals.
Why is it important for businesses to set aims and objectives
Business aims and objectives are important to set, the business needs to know if the aims and objectives have been achieved and if the business is beating its competition. Cummins may decide to set an aim to improve its customer service. The aim will be monitored and checked to see if it is achieved. If Cummins are succeeding then the regular customers will keep returning so they know their customer service is a high quality. With the regular customers who keep buying and the high standards the profits will gradually increase. It is also important as the company is always looking forward and to its future. The future is always in a big businesses plan, as they need to keep their reputation up and keep bringing the latest technology out. To do this the employees and engineers will have to be creating new plans frequently to be on target to release the latest models. It is important for Cummins to hold regular board meetings to discuss the aims and objectives and assess if they are being met to the required standard. New aims and objectives will also be set in order to keep Cummins moving forward. Aims and objectives are important for Cummins so they can set themselves goals. This helps to motivate staff work at the expected level and/or beyond.
Show how successful Cummins is in meeting these aims and objectives
Cummins needs to see if its aims and objectives are being met or not. Cummins can check this through profit or sales. If sales are on the increase then Cummins’ target of maximising sales has been achieved. But if Cummins fails that aim then they may be forced to release people from their jobs. Cummins is planning to shed 95 jobs at its heavy vehicle diesel engines factory in Darlington. This shows that Cummins has gone wrong in the past and has needed to release its employees. If Cummins has succeeded their aim they may expand and open more branches. Cummins Engine of the US is planning a £17m factory near Ramsgate in Kent(UK) to make power-generating sets, providing 300 jobs. This shows that Cummins is looking towards its future as it is providing new jobs for a local community. Opening a new factory will also provide more profit for Cummins. All these things will help to expand the Cummins brand worldwide.
Explain why the type of ownership is suited to Cummins
Cummins is a worldwide business with a good reputation. Because Cummins is a private limited company it has limited liability. This means if the business closes due to it becoming bankrupt, then the owners and shareholders will not lose their own personal wealth or belongings. The ownership of Cummins is very important in order to keep the business running. As Cummins is an Ltd, its ownership must be high on its agenda. The ownership can determine how successful a business can be. Cummins must have the right type of ownership in order to maintain its reputation and high standards. This type of ownership is suited to Cummins because it has many locations across the world. Due to the number of employees at Cummins and the general size of the business as a whole, being an Ltd is the most suited type of ownership for Cummins to be successful and achieve their aims and objectives.
Suggest how any why the ownership and aims and objectives of Cummins may need to change in order to respond to a change in business activities
All businesses want to be as successful as they can. A major part of this is how much profit the business gains each year. If the businesses profits are decreasing, then the business will stop growing and may have to go into recession, eventually they might be forced to close down. A business may be forced to change their objectives, some reason for this are: a business opens up in the same market area(competition), government measures and legal issues. If a rival competitor of Cummins was set up in the local area, Cummins would need to seriously rethink their aims and objectives. Cummins may want to design and produce a new type of engine, which is better than its competitor. Or if the government made a new law, then Cummins may need to respond and/or make a change in the business. A government change could pose a threat to Cummins depending on it. If the government say to businesses they must do health and safety checks every two months. Then Cummins may need to upgrade and rethink their safety procedure. This will be cost money, but it is important Cummins think about safety, because the safer they are the better reputation they get. And they will have no problems with the government.
Information taken from a telephone call on 8th November 2003.
Taken from on 12th November 2003
Taken from on 12th November 2003