Business at work — страница 5

limited company that means all owners have limited liability. If a company has debts, the owners can only lose the money they have invested in the firm. Main source of finance is selling shares and borrowing from the banks. Tesco has a thousands of owners, every man who has any shares is owner; but these people can’t control the company, so company has a board of directors and chairman who control the company. Tesco has a heavy programme of capital expenditure, investing in new stores and upgrading existing ones. In the year ending 28th February 1998, the group capital expenditure was £841 million, compared to £758 million in the year ending 28th February 1997. This £841 million was divided into £737 million spend in the Great Britain, £63 million in Ireland, north and

south, and £41 million in Europe. Tesco anticipates that in the 1998-9 financial year, capital spending will rise to about £950 million, with most of the extra spending being concentrated in Ireland and Central Europe. Profit is also distributed to shareholders in the form of dividends. For example, in 1998 the profits from Tesco after tax were £505 million. About 50% of the profits were distributed to shareholders as dividends. Subsequently approximately £250 million was retained by the company for investment in new stores and improving their service to customers. E2 Objectives of the business. The objectives of the business can vary enormously A charity’s overriding objective might be to alleviate poverty in the developing world; on the other hand many companies’ major

objective is to generate the maximum profits possible. An organisation’s mission statement gives an indication of the purpose of the business and dovetails with the objectives the organisation set itself. Mission statement. Many organisations attempt to express the purpose of their being within a few sentences. The mission statements are intended to provide a sense of common purpose to direct and stimulate the organisation. This statement represents the vision or mission of the organisation. Mission statements change over time to reflect the changing competitive nature of the markets in which business sell. Mission statement normally set out to answer the following questions: What business is the organisation in? Who is to be served? What benefits are to be provided? How are

consumers to be satisfied? Objectives. Mission statement Business objectives are medium- to long-term goals or targets that provide a sense of direction to the business. Objectives are normally measurable and have a stated timescale. Business objectives Company may have a number of objectives. In general, the objectives pursued by a business tend to vary according to its size, ownership and legal structure. Divisional/departmental objectives Figure 1.1 illustrates the interrelationship between a company’s mission statement and its objectives. Figure 1.1: The hierarchy of objectives The goals pursued by any business can be separated into primary and secondary objectives. Primary objectives are those that must be achieved if the business is to survive and be successful. These

relate to issues such as profit levels and market share. Secondary objectives tend to measure the efficiency of the organisation. They may affect the chances of success, but only in the long term. Examples include administrative efficiency and labour turnover rates. Profit maximisation. Profit maximisation one of the most important objective for companies which are owned by shareholders. Profit, at is simplest, refers to the extent to which revenues exceed costs, so profit maximisation occurs when the difference between sales revenue and total cost is greatest. Survival. Survival is an important objective for many businesses. It is particularly important when businesses are vulnerable such as: during their first few years of trading during periods of recession or intense

competition at a time of crisis such as a hostile takeover. Most recently established businesses have survival as an objective. Increasing sales or market share. Growth increases the scale of a business, resulting in higher levels of output and more sales. Many businesses pursue growth strategies because their managers believe that this is essential for survival. If a firm grows, it might be able to attract more customers, earn higher profits and begin to establish itself in the market. Growth offers: increased returns for the owners of the business higher salaries for employees of the business a wider range of products for the business’s existing and potential customers. Growth can be important target for managers. It is increasingly common for managers’ pay packages to be a