1.

5 - Business Objectives and Stakeholder Objectives

How to Answer a Paper 2 Question
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question

1 – Definition
LO2: Be able to prepare a2effective
– Application
Splash Screen3 and
– Analysis
Navigation Screen4 - Evaluation
In relation to XXXX, the YYYY (DEFINITION) is relevant (APPLICATION) to the
business by…
This means that … (ANALYSIS)
Therefor …. (BALANCE FOR ANALYSIS)
However …. (BALANCE FOR ANALYSIS)
Based on the evidence provided in the Case Study, I would agree/disagree about
XXXX because …. (Evaluation)
Example:
Q1 – Haltec, a computer company has decided to market the release of a new brand of
gaming mouse. In your opinion, how could they use Product as their unique selling
point.
A1 – In relation to the Product, marketing that is aimed at emphasizing the quality of the
product as the best thing about it, this means that Haltec would show the quality in
advertisements like magazine adverts. Therefor the audience would be made aware of
the good points like size, speed, ability. However this may conflict with its price or the
place where they advertise.
Based on the evidence provided in the case study, I would agree that if the product is of
good quality then using Product as the USP would benefit the company more than the
other P’s in marketing as this is what the customers will look for in computer equipment.
Assessment objectives
Assignment Checklist QO1 QO2 QO3 QO4 Q05 QO6
 The
The four
four assessment
assessment objectives
objectives in
in Cambridge
Cambridge IGCSE
IGCSE Business
Business Studies
Studies are:
are:
 AO1: Knowledge and understanding
AO1: Knowledge and understanding
 AO2:
AO2: Application
Application
 AO3: Analysis
AO3: Analysis
AO4:
AO4: Evaluation

Evaluation
 AO1:
AO1: Knowledge
Knowledge and
and understanding
understanding Candidates
Candidates should
should be
be able
able to:
to:
◦◦ demonstrate
demonstrate knowledge
knowledge and
and understanding
understanding ofof facts,
facts, terms,
terms, concepts,
concepts, conventions,
conventions, theories
theories and
and
techniques commonly applied to or used as part of business behaviour.
techniques commonly applied to or used as part of business behaviour.
 AO2:
AO2: Application
Application Candidates
Candidates should
should be
be able
able to:
to:
◦◦ apply
apply their
their knowledge
knowledge and
and understanding
understanding ofof facts,
facts, terms,
terms, concepts,
concepts, conventions,
conventions, theories
theories and
and
techniques.
techniques.
 AO3:
AO3: Analysis
Analysis Candidates
Candidates should
should be
be able
able to:
to:
◦◦distinguish
distinguish between
between evidence
evidence and
and opinion
opinion in
in aa business
business context
context
◦◦order,
order, analyse
analyse and
and interpret
interpret information
information in
in narrative,
narrative, numerical
numerical and
and graphical
graphical forms,
forms, using
using appropriate
appropriate
techniques.
techniques.
 AO4:
AO4: Evaluation
Evaluation Candidates
Candidates should
should be be able
able to:
to:
◦◦ present
present reasoned
reasoned explanations,
explanations, develop
develop arguments,
arguments, understand
understand implications
implications and
and draw
draw inferences
inferences
◦◦ make
make judgements,
judgements, recommendations
recommendations and
and decisions.
decisions.
Assessment objectives
Assignment Checklist QO1 QO2 QO3 QO4 Q05 QO6

 Relationship between assessment

 objectives and
components The approximate weightings allocated
to each of the assessment objectives are
summarised below.
Assessment Objective Paper 1 Paper 2 Weighting for
qualification
AO1: Knowledge and 40% 20% 30%
understanding
AO2: Application 30% 30% 30%
AO3: Analysis 12% 25% 20%
AO4: Evaluation 15% 25% 20%
Grade Descriptors – A Grade
Assignment Checklist QO1 QO2 QO3 QO4 Q05 QO6
 Grade
Grade descriptions
descriptions are
are provided
provided toto give
give aa general
general indication
indication of
of the
the standards
standards of
of achievement
achievement likelylikely to
to
have been shown by candidates awarded particular grades. The grade awarded will
have been shown by candidates awarded particular grades. The grade awarded will depend in practicedepend in practice
upon
upon the
the extent
extent to
to which
which the
the candidate
candidate has
has met
met the
the assessment
assessment objectives
objectives overall
overall and
and itit might
might conceal
conceal
weakness
weakness inin one
one aspect
aspect of
of the
the examination
examination which
which isis balanced
balanced byby above
above average
average performance
performance in in another.
another.
 A
A Grade
Grade -- A
A candidate
candidate should
should demonstrate
demonstrate the the following:
following:
 Knowledge
Knowledge and and understanding
understanding
◦◦ an
an excellent
excellent ability
ability to
to identify
identify detailed
detailed facts,
facts, conventions
conventions and
and techniques
techniques in
in relation
relation to
to the
the content
content of
of
the
the syllabus
syllabus
◦◦ an
an excellent
excellent ability
ability to
to define
define the
the concepts
concepts and
and ideas
ideas of
of the
the syllabus.
syllabus.
 Application
Application
◦◦ aa thorough
thorough ability
ability to
to apply
apply knowledge
knowledge and
and understanding,
understanding, using
using terms,
terms, concepts,
concepts, theories
theories and
and
methods effectively to address business problems
methods effectively to address business problems and issuesand issues
◦◦ aa thorough
thorough ability
ability to
to form
form conclusions
conclusions from
from this
this information
information and
and to
to demonstrate
demonstrate these
these conclusions
conclusions
clearly
clearly and
and logically.
logically.
 Analysis
Analysis
◦◦ an
an excellent
excellent ability
ability to
to classify
classify and
and comment
comment on
on information
information presented
presented in
in various
various forms
forms
◦◦ an
an excellent
excellent ability
ability to
to distinguish
distinguish between
between evidence
evidence and
and opinion.
opinion.
 Evaluation
Evaluation
◦◦ an
an excellent
excellent ability
ability to
to make
make clear,
clear, reasoned
reasoned judgements
judgements and
and communicate
communicate them
them in
in an
an accurate
accurate and
and
logical
logical manner.
manner.
Grade Descriptors – C Grade
Assignment Checklist QO1 QO2 QO3 QO4 Q05 QO6
 A
A Grade
Grade C
C candidate
candidate should
should demonstrate
demonstrate the
the following:
following:
 Knowledge
Knowledge and
and understanding
understanding
◦◦ aa sound
sound ability
ability to
to identify
identify detailed
detailed facts,
facts, conventions
conventions and
and techniques
techniques in
in
relation
relation to
to the
the content
content ofof the
the syllabus
syllabus
◦◦ aa sound
sound ability
ability to
to define
define the
the concepts
concepts and
and ideas
ideas of
of the
the syllabus.
syllabus.
 Application
Application
◦◦ aa sound
sound ability
ability to
to apply
apply knowledge
knowledge and
and understanding,
understanding, using
using terms,
terms,
concepts,
concepts, theories
theories and
and methods
methods appropriately
appropriately to
to address
address problems
problems andand
issues
issues
◦◦ aa sound
sound ability
ability to
to draw
draw conclusions,
conclusions, and
and to
to present
present these
these in
in aa clear
clear manner.
manner.
 Analysis
Analysis
◦◦ aa sound
sound ability
ability to
to use
use and
and comment
comment on
on information
information presented
presented in
in various
various
forms
forms
◦◦ aa sound
sound ability
ability to
to distinguish
distinguish between
between evidence
evidence and
and opinion.
opinion.
 Evaluation
Evaluation
◦◦ aa sound
sound ability
ability to
to evaluate
evaluate and
and make
make reasoned
reasoned judgements.
judgements.
Grade Descriptors – F Grade
Assignment Checklist QO1 QO2 QO3 QO4 Q05 QO6
 A
A Grade
Grade FF candidate
candidate should
should demonstrate
demonstrate thethe following:
following: Knowledge
Knowledge and
and
understanding
understanding
◦◦ aa limited
limited ability
ability to
to identify
identify specific
specific facts,
facts, conventions
conventions oror techniques
techniques in
in
relation
relation to
to the
the content
content of
of the
the syllabus
syllabus
◦◦ aa limited
limited familiarity
familiarity with
with definitions
definitions of
of the
the central
central concepts
concepts and
and ideas
ideas of
of the
the
syllabus.
syllabus.
 Application
Application
◦◦ aa limited
limited ability
ability to
to apply
apply knowledge
knowledge and
and understanding,
understanding, using
using terms,
terms,
concepts,
concepts, theories
theories and
and methods
methods appropriately
appropriately to
to address
address problems
problems and
and
issues.
issues.
 Analysis
Analysis
◦◦ aa limited
limited ability
ability to
to classify
classify and
and present
present data
data in
in aa simple
simple way
way and
and aa limited
limited
ability
ability to
to select
select relevant
relevant information
information from
from aa set
set ofof data
data
◦◦ aa limited
limited ability
ability to
to distinguish
distinguish between
between evidence
evidence andand opinion.
opinion.
 Evaluation
Evaluation
◦◦ aa limited
limited ability
ability to
to understand
understand implications
implications and
and make
make recommendations.
recommendations.
1.5 – Assessment Objectives
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question

1.5 Be
LO2: able to prepare
– Business a effectiveand
objectives Splash Screen and Navigation
stakeholder objectives Screen

Outlines below are the objectives for this section of the Unit. They should be
revised as part of the exam preparation.
1.5.1 Businesses can have several objectives – and the
importance of these can change: The difference
 Need for business objectives and the importance of between who
makes decisions
them
 Different business objectives, e.g. survival, growth, Who owns the
businesses around
profit and market share you
 Objectives of social enterprises What happens to
1.5.2 The role of stakeholder groups involved in business the boss when they
activity: are no longer the
 Main internal and external stakeholder groups boss
 Objectives of different stakeholder groups Who is the boss of a
government run
 Use examples to illustrate these objectives and how
business
they might conflict The company your
1.5.3 Demonstrate an awareness of the differences in the parents work for,
aims and objectives of private sector and public sector who owns it
enterprises
1.5 – Glossary
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question

Be able to prepare a effective Splash Screen and Navigation Screen

Definitions:
LO2:
What is SMART
 Business Objectives – The aims or targets that a What is the
business works towards. difference
between and
 Profit – The total income of a business (sales Aim and an
Objective
revenue) less total costs
Why would
 Market Share – the proportion of the total Objectives
market sales achieved by one business. change when a
company
 A Social Enterprise – Has social objectives as merges
well as an aim to make a profit to reinvest back What happens
when
into the business. Objectives are
 A Stakeholder – Any person or group with a not met
How are
direct interest in the performance and activities objectives of a
of a business. charity different
from a private
business.
1.5.1 - Business Objectives – Why set them?
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 34
34

 An
LO2: Objective
Be able to prepareisa an aim Splash
effective or a target
Screen to
andwork
Navigation Screen
What is SMART
towards, All businesses should have objectives,
What is the
they help make a business successful, although difference
setting them does not ‘guarantee success’. The between and
benefits of setting objectives are: Aim and an
Objective
• They give workers and managers a clear target
to work towards and this helps motivate Why would
Objectives
people. change when a
• Taking decisions will be focused on: “Will it company
help achieve our objectives?” merges
• Clear and measurable objectives help unite the What happens
whole business towards the same goal. when
Objectives are
• Business managers can compare how the not met
business ahs performed with their objectives, How are
to see if they have been successful or not. objectives of a
charity different
from a private
business.
1.5.1 – What objectives do Businesses set?
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 34
34

 Objectives
LO2: are often
Be able to prepare different
a effective Splashfor different
Screen businesses,
and Navigation Screen
A business may have been formed by an entrepreneur What is SMART
to provide employment and security for the owner or What is the
his/her family. difference
between and
 It could have been started to make as big a profit as Aim and an
possible for the owner or might have had a more Objective
charitable purpose in mind. Many of the worlds Why would
charities are huge. Objectives
 The most common objectives for private sector change when a
businesses include: company
1. Business Survival merges
2. Profit What happens
3. Returns to Shareholders when
4. Growth of the Business Objectives are
5. Market Share not met
6. Service to the community How are
objectives of a
charity different
from a private
business.
1.5.1 – What objectives do Businesses set?
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 53
53

1. Business
LO2: Be able toSurvival
prepare –a effective Splash Screen and Navigation Screen
 When a business has recently been set up, or when the economy What is SMART
is heading for a recession, the objectives of a business will be What is the
more concerned with survival than anything else. New difference
competitors can also be a threat, the managers could respond by between and
lowering prices in order to survive even though this would lead Aim and an
to lower profits. Objective
2. Profit
 When a business is privately owned rather than the government, Why would
it is usually that the business will try to operate at a profit. Profits Objectives
are needed to: change when a
• Pay a Return to the business owners for the capital invested company
and the risk taken merges
• Provide finance for further business investment. What happens
 Without profit the business is likely to close. Will a business try to when
make as much profit as possible? Probably but there are risks to Objectives are
this aim, putting up prices to increase profit can lower sales, not met
other people will set up competition, which will reduce long term
profits. A satisfactory level of profits means less hours and less How are
stress. objectives of a
charity different
from a private
business.
1.5.1 – What objectives do Businesses set?
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 54
54

3) Returns
LO2: Be abletotoShareholders –
prepare a effective Splash Screen and Navigation Screen
 Shareholders own limited companies and the managers will often set the What is SMART
objective of ‘increasing returns to shareholders’ in order to discourage
shareholders from selling their shares, therefor helping managers keep their jobs. What is the
 Returns to shareholders are increased in two ways: difference
• Increasing profit and the share of the profit paid to the shareholders as between and
dividends. Aim and an
• Increasing share price – managers can try to achieve this by making profits and Objective
by putting plans in place that gives the business a good chance of growth and
future higher profits. Why would
4) Growth Objectives
 The owners and managers of a business may aim for growth in the size of the change when a
business – often measured by value of sales or output - for a number of reasons: company
• To make jobs more secure if the business is larger merges
• To increase manager’s salaries and status as the business grows.
• To open up new possibilities and help to spread the risks of the business by What happens
moving into new products and markets. when
• To obtain a higher market share from growth in sales Objectives are
• To obtain cost advantages, called economies of scale, from business expansion. not met
 Growth will only be achieved if the customers are satisfied with the products or
services provided, therefor putting customers needs as a high priority is a How are
necessary objective. objectives of a
charity different
from a private
business.
1.5.1 – What objectives do Businesses set?
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 54
54

5) Market
LO2: Be ableShare –
to prepare a effective Splash Screen and Navigation Screen
 If the total value of sales in a market is $100m in one year and Company A
sold $20m, then Company A’s Market Share is 20%.
Company Sales X 100 What is SMART
Market Share % = Total Market Sales What is the
 Increased market share gives a business: difference
• Good Publicity, as they could claim to be “the most popular’ between and
• Increased influence over suppliers, as they will be keen to sell to a business Aim and an
that is becoming relatively larger than others in the business
Objective
• Increased influence over customers (e/g/ setting prices)
6) Providing a Service to Society - Why would
 Social Enterprises are operated by private individuals within the private sector Objectives
but they do not have profit as an objective. The people operating the social change when a
enterprise often set three objectives for the business: company
 Social – to provide jobs and support for disadvantaged groups in society, such merges
as the disables or homeless.
 Environmental – to protect and clean the environment What happens
 Financial – to make a profit to invest back into the social when
enterprise and expand the social work that is being done. Objectives are
 An example of a social enterprise is the Hands Along not met
the Nile project and the Zabaleen reclamation projects
in Egypt or the RangSutra project in India. How are
objectives of a
charity different
from a private
business.
1.5.1 – Why Business objectives could change?
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 55
55

 ItBe
LO2: is able
very to
unusual for a
prepare a business
effectivetoSplash
keep the same and
Screen objectives forever.Screen
Navigation Below
are examples of situations that cause objectives to change:
1) A business et up has recently survived for 3 years and the owner now What is SMART
wants to work towards a higher profit.
2) A business has achieved a higher market share and now the objective of What is the
earning higher returns for shareholders. difference
3) A profit making business operates in a country facing a serious economic between and
recession so now has the short term objective of survival. Aim and an
 Activity 5.1 – Which objectives for which business? Objective
 Here are details of 4 businesses:
?
• A small firm of builders which has noticed new businesses being set up in
the building industry
Why would
Objectives
change when a
• A recently established business in the rapidly expanding computer
industry, which is owned by 2 young, ambition entrepreneurs. company
• A large book publisher which dominates the market in textbooks in your merges
country What happens
• A group of people who are concerned about the lack of clean water when
provided to poor communities Objectives are
a) Identify and explain the most likely main objective of the managers of each not met
of these businesses.
b) In each example, explain the decisions that could help the businesses to How are
achieve these objectives. objectives of a
charity different
from a private
business.
1.5.2 – Stakeholder involvement in Business Activity
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 55
55

 The
LO2: following
Be able to prepare agroups
effective of people
Splash are
Screen andinvolved
Navigation in or
Screen
affected by all business activities: What is SMART
What is the
Owners Consumers Banks difference
between and
Workers Government Managers Aim and an
The Whole Community. Objective
Why would
 These groups are sometimes called the Objectives
stakeholders of the business as they have an change when a
company
interest on how the business is run. Some of merges
these groups are internal to the business, What happens
working for it or owning it, the rest are external. when
Objectives are
 Why are they important to the business? How not met
are they affected. How are
objectives of a
charity different
from a private
business.
1.5.2 – Stakeholder involvement in Business Activity
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 56
56

Stakeholder Main Features Most likely objectives for the stakeholder

GroupBe able to prepare a effective Splash Screen and Navigation
LO2: group Screen
Owners • They put capital in to set up and expand the business • Share of the profits so that they gain a
(Internal) • They will take a share of the profits if the business rate of return on the money put into
succeeds the business.
• If the business does not attract enough customers, • Growth of the business so that the
then they may lose the money they invested value of their investment increases
• They are risk takers
Workers • Employed by the business, employees. • Regular payment for their work
(Internal) • They have to follow instructions of the managers • Contract of employment
and may need training to work effectively. • Job Security – workers do not want to
• They may be on full or part time contracts and a look for new jobs frequently
temporary or permanent basis. • Job that gives satisfaction and provides
• If there is not enough work for all workers, some motivation.
may be made redundant (retrenchment) and asked
to leave.
Managers • They are also employees and control the work of • High salaries because of the important
(Internal) other workers work they do.
• They take important decisions
• Their successful decisions could lead to business
• Job Security – depending on success
• Growth of the business so that
?
expansion. managers can control a bigger and
• If they make poor decisions, the business could fail. better known business, giving them
more status and power.
1.5.2 – Stakeholder involvement in Business Activity
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 56
56

Stakeholder Main Features Most likely objectives for the stakeholder

LO2: Be able to prepare a effective Splash Screen and Navigation
Group groupScreen
Customers • Important to every business, they buy the goods or • Safe and reliable products
(external) services the business produces or provides • Value for money
• Without enough customers the business makes losses and • Well designed products of good quality
eventually fails • Reliability of service and maintenance.
• The most successful businesses try to find out what
consumers want before making goods or providing
services – this is called market research.
Government • They are responsible for the country’s economy • Want the business to succeed in their
(external) • They pass laws to protect consumers and workers country. Successful businesses will
employ workers, pay taxes and
increase the country’s output.
• Expect all firms to stay within the law –
laws affect business activity
Whole • Heavily affected by business activity. E.g. Dangerous • Jobs for the working population
Community products might harm the population, factories can • Production that does not damage the
(external) produce pollution that damages rivers, the sea and air environment
quality. • Safe products that are socially
• Businesses also create jobs and allow workers to raise responsible.
their living standards. Many products are beneficial to the
community like medicines or public transport.
Banks • They provide finance for the business’s operations. • Expect the business to be able to pay
(external) interest and repay capital lent –
business must remain liquid. ?
1.5.3 – Objectives of a Public Sector Business
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 57
57

 InBe1.2
LO2: we
able toexplained
prepare a how the government
effective owns
Splash Screen andand control Screen
Navigation a
range of businesses and other activities in a mixed economy.
These were in the Public Sector. What are the likely objectives for What is SMART
public-sector businesses? What is the
 Financial – Meet profit targets set by the government, sometimes difference
this is reinvested back into the business and on other occasions, between and
handed over to the government as the ‘owner’ of the Aim and an
organisation. Objective
 Service – Provide a service to the public and meet quality targets Why would
Objectives
set by the government. E.g. Health and Education Services will be change when a
expected to achieve targets laid down for them, and state-owned company
train and postal services will have reliability and punctuality merges
targets.
What happens
 Social – Protect or create employment in certain areas – when
especially poor regions with few other business employers. Objectives are
not met
How are
objectives of a
Tips for Success – You should not suggest that public-sector charity different
from a private
businesses ‘do not make a profit’. Most have this as an aim but they business.
have more important objectives set for them by governments.
1.5.3 – Revision Summary – Business Objectives (Private Sector)
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 57
57

LO2: Be able to prepare a effective Splash

May Screen
changeand Navigation
over time Screen

Increase Increase Provide a Service

Survival
Make Profits Growth Stakeholder returns market Share to the community

INCREASE MARKET
SHARE Start
Start

Interested Groups can have

different Objectives

Owners Government Community Customers Managers Bank Workers

Conflict can occur

1.5.3 – Activity 5.2 – Coca-Cola’s Objectives
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 57
57

 Coca
LO2: Cola’s
Be able senior managers
to prepare have
a effective set the
Splash objective
Screen of increasingScreen
and Navigation
returns to the owners of the company. It has millions of shareholders,
however than managers believe that this can only be achieved if What is SMART
Coca-Cola meets three other objectives.
• Remain the world’s largest soft drinks company by value of sales.
• Continue to satisfy consumers with a top-value and clearly branded
? What is the
difference
between and
product. Aim and an
• Protect the environment of the local communities where Coca-Cola Objective
drinks are made.
a) Why do you think the senior managers believe that ‘increasing Why would
returns to owners’ is important? Objectives
b) Explain why Coca-Cola has set three other objectives as well as change when a
‘returns to owners’? company
c) By referring to the market in your own country, explain how you merges
think Coca-Cola could achieve its aim of remaining the world’s What happens
largest soft drinks company. when
Objectives are
not met
How are
objectives of a
Increase returns to shareholders charity different
from a private
Remain largest soft Satisfy customers with top-value Protect the business.
drinks company branded product environment
1.5.3 – Conflict of Stakeholders Objectives
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 57
57

 InBethe
LO2: Business
able Worlda iteffective
to prepare is not as Splash
simple as settingand
Screen one Navigation
objective and aim
Screen
for that. Most businesses are trying to satisfy the objectives or more than
one group. What is SMART
Consumers – –Price
Local Community and
Environment,
What is the
Directors
Workers --Jobs
growth difference
quality
low pollution, jobs
between and
Aim and an
Objective
Why would
Objectives
change when a
company
merges
 Managers therefor have to compromise when they come to decide on the
best objectives for the business they are running but it would be unwise What happens
to ignore the real worries or aims of other groups with a vested interest when
in the business. Objectives are
not met
 Managers will also have to be prepared to change the objectives over
time. Growth could be the best option during a period of expansion in the How are
economy but survival by cost cutting might be better for the business in a objectives of a
recession. charity different
from a private
business.
1.5.3 – Case Study Example – Business Stakeholders
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 58
58

 Gaspro
LO2: Be ableistoa prepare
large oil company operating
a effective in your country.
Splash Screen The following
and Navigation stakeholder groups are
Screen
interested in the work of the company.
• Owners of the company – they will want the business to make as much profit as possible.
• Directors – (senior managers of the company appointed by the owners) They will be
interested in growth of the business as their salaries are likely to depend on this.
• Workers –They will want reasonably prices products of appropriate quality or they may buy
goods from competitors.
 In practice, these stakeholder objectives could conflict with each other, e.g.
• It could be that a cheap method of production increases profit but causes more pollution
• A decision to expand the plant could lead t a dirtier, noisier local environment
• A decision to introduce new machines could reduce the jobs at the refinery but lead to
higher profits.
• Expansion could be expensive, reducing payments to owners, and this could reduce short
term profits.
 Activity 5.3 – Based on the Case Study:
a) What is meant by ‘stakeholder group’?
b) Identify and explain one other possible conflict of objectives between Gaspro stakeholders.
1.5 – Case Study Example – Business Stakeholders and their aims

Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 59
59

 Success
LO2: prepare
Be able toTips – Bea prepared
effective Splash Screenhow
to explain and a
Navigation
businessScreen
objective might satisfy
some
some stakeholders
stakeholders butbut not
not others.
others.
Profits Salaries Incomes
Return on Capital Status Job Security
Control Satisfying Work

Workers
Owners
Managers

Start
Start BUSINESS STAKEHOLDERS

Customers Community Government

Goods and Services Jobs Employment

Quality Clean Environment Taxes
Good Value Safe products Increasing National output
1.5.3 – International Business in Focus – Toyota Cars
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 60
60

 Toyota
LO2: makes
Be able clear its business
to prepare objectives.
a effective Splash Screen and Navigation Screen
 The president of Toyota recently announced the targets for the business over
the next few years. The key objective is sales growth. Sales of 10m cars and
trucks by 2016 is the main target. Toyota wants to achieve 50% of these sales
in the ‘emerging economies’ of Asia, Africa and South America.
 Although profits are important, Toyota has set quite low earnings targets,
preferring to focus on growth in a competitive market, especially at a time
when the global economy is so troubled by debt problems and fear of
recession is some major countries. The company also has the aim of
developing 10 more hybrid models over the next 5 years (hybrid cars are
powered by electricity and petrol)
 “Our two main pillars of growth in the future will be emerging markets and
hybrid vehicles, We cannot sit on our laurels in order to stay the market
leader in hybrids”, Mr Toyoda said.
 Discussion Points
• Why did the Toyota President think it necessary to set objectives for
Toyota for the next few years?
• Why do you think sales growth and developing new models seem to be
more important than ‘making as much profit as possible’?
• Which stakeholder groups will be affected – positively or negatively – by
Toyota working towards these objectives?
Exam-style Questions - Paper 1
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 61
61

LO2: to prepare
Be ableand
1. Asser a effective
his partner Splash Screen
Ali decided and
to start Navigationselling
a business Screenflowers called A
and A Blooms. They agreed on the business objectives they would set. There
are several other shops in their town and there is much competition. Asser
and Ali had very little cash to start their shop, however, after 5 years running,
it is still open.
Business objectives have changed, , there are plans to open 2 or 3 new
shops, perhaps by taking over some of their competitors. The business now
employs 5 workers and uses several local flower growers as suppliers.
a) What is meant by ‘business objective’? [2]
b) Identify two of A and A Blooms' stakeholders, other than workers and
suppliers. [2]
c) Identify and explain two likely business objectives of A and A Blooms
when the business was first established. [4] ?
d) Identify and explain two likely reasons why Asser and Ali have changed
the business objectives of A and A Blooms. [6]
e) Do you think that setting business objectives for A and A Blooms will make
sure the business is successful? Justify your answer? [6]
Exam-style Questions - Paper 1
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 61
61

LO2:
2) Be able
The Big prepare
to Pit a effective
Mining businessSplash Screen
(BPM) ownsand Navigation
and operates Screen
coal and gold mines
in several countries. It employs thousands of workers, most of them
working in dangerous conditions on low pay. Rubbish from the mines is
often dumped in local rivers. ‘Making higher profits and raising higher
returns to our shareholders are the most important objectives’ said the
Managing Director of BPM to the senior managers recently. ‘Shareholders
are our most important stakeholder group’ the Manager added.
a) What is meant by ‘stakeholders’? [2]
b) Identify two objectives the managers might set for BPM apart from
profits and returns to shareholders. [2]
c) Identify and explain two possible reasons why BPM has profit as an
objective. [4]
d) Identify and explain how a decision to open a new BPM mine might ?
affect two stakeholder groups. [6]
e) Do you agree with the Managing Director when it was said that
shareholders are the most important stakeholder group? Justify your
answer. [6]
End of Unit Case Study – Paper 2
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 62
62

LO2:
UnitBe01able to prepare a effective
– Understanding SplashActivity
Business Screen and Navigation Screen

 A new business but which one?

 Mayar’s job is to repair motorcycles. She works for a large motorcycle sales business that sells new and
second hand motorcycles. Mayar’s uncle died earlier this year and left her $10,000 (70,000LE). She has
always wanted to work for herself and now she has some money to start her own business.
 Mayar is going to choose between opening her own motorcycle shop selling motorcycle clothes or
buying a franchise from a big motorcycle clothes retail store. To open her own motorcycle clothes store
will take a lot of effort to find a suitable location with the shop fittings needed. Buying a franchise for a
clothes shop will ne expensive, however the franchise company will help Mayar with a lot of the start
up problems such as finding a suitable shop.
 Appendix 1 – Letter to the bank Manager

?
 Dear Sir/Madam.
 I want to set up my own business. I have $10,000 to invest in my business but I need additional funds, I
have two possible business ideas.
 The first one is to set up my own motorcycle clothes shop and for that I will need an additional $15,000
to buy clothes for the shop. I will rent my shop.
 The second idea is to buy a franchise for a motorcycle clothes shop and for that I will need an additional
$100,000. $50,000 will be needed to buy the franchise and $50,000 to buy clothes inventories. I will
rent my shop.
 I would like to come and see you to discuss my two ideas.
 Yours faithfully,
 Mayar.
End of Unit Case Study – Paper 2
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 34
34

LO2:
UnitBe01able to prepare a effective
– Understanding SplashActivity
Business Screen and Navigation Screen

a) Identify and explain four personal characteristics that Mayar needs to be a

successful entrepreneur.
[8]
b) Mayar has decided which type of business organisation to choose if she sets
up her own business. Consider the advantages and disadvantages of the
following types of business organisation. Recommend which one Mayar
should choose. Justify your choice.
• Sole trader
• Partnership ?
• Private Limited Company.
[12]
a) Identify two stakeholders in Mayar’s new business. Explain why each
stakeholder is interested in her business.
[8]
b) Consider the advantages and disadvantages of Mayar buying a franchise
from a big clothes retail business instead of setting up her own clothes
shop. Which option do you think she should take? Justify your choice.
[12]
Real Exam Questions - Paper 1
Scenario Glossary
Glossary 1.5.1
1.5.1 1.5.2
1.5.2 1.5.3
1.5.3 Exam
Exam Question
Question Page
Page 34
34

LO2: able to prepare

Business
1.5: Be a effective
objectives andSplash Screen andobjectives
stakeholder Navigation Screen

 June 2015 – Exam Paper 01 – 1.4 Question