Chapter 1 · study this before the mock
Introduction to business
The vocabulary chapter. Stakeholders, objectives and the mission-to-target hierarchy recur in every later chapter, so getting the words exactly right pays off all paper.
Area Business objectives and functionsGrid weight 10%Manual pp 1–30Read 4 minChapter mock 60 questions
The chapter on one page
How it works5 figures
| Class | Who | What they want |
|---|---|---|
| INTERNAL | Employees, managers | Pay, job security, career, working conditions |
| CONNECTED | Shareholders, customers, suppliers, lenders, bankers | Return, quality and value, prompt payment, repayment of the loan |
| EXTERNAL | Government, the community, pressure groups, professional bodies | Tax and compliance, employment, environmental care, standards |
SSpecific - it says exactly what is to be achieved
MMeasurable - progress can be quantified
AAchievable - it is within reach
RRelevant - it supports the mission
TTime bound - it has a deadline
| Profit-seeking business | Not-for-profit organisation | |
|---|---|---|
| Primary objective | Maximise shareholder wealth | Deliver the service or mission |
| Success measured by | Profit and return | VALUE FOR MONEY: economy, efficiency, effectiveness |
| Main constraint | Competition and the market | The budget or funding available |
| Who it answers to | Shareholders | Funders, members, beneficiaries, the public |
Know these cold
Mission
The overriding purpose of the organisation, in line with the values or expectations of stakeholders.
Stakeholder
A person or group with an interest in what the organisation does.
Value added
The difference between the value of outputs and the cost of the inputs bought in.
Economy, efficiency, effectiveness
Economy: buying inputs at the lowest cost. Efficiency: getting the most output per unit of input. Effectiveness: actually achieving the objective.
Where marks get lost
Calling customers and suppliers external stakeholdersDo this instead: they are CONNECTED - they have an economic relationship with the business.
Mixing up efficiency and effectivenessDo this instead: efficiency is output per input; effectiveness is whether the objective was met.
Writing an objective with no number and no dateDo this instead: an objective that is not measurable and time bound is a goal, not an objective.
Before you start the mock
Picture the diagrams, tick the checklist, then sit the chapter mock while it is fresh. 60 questions are waiting.
Start the chapter mock