An aim or objective is a statement of what the business is trying to achieve over, the next 12 months.

Many answers are possible here. Different organisations have different objectives.

If the record store is a start-up business, it has few customers and no reputation. The most likely objective for a set up business is survival.

Even established organisations can sometimes set themselves the aim of still being in business in one year’s time. This is particularly true in markets where

• there is a competition – traditional record shops are losing customers to the Internet where songs can be downloaded and played on MP3 players
• social trends if the product is becoming unfashionable or new technologies: many customers now prefer to listen to their music on an MP3 player

I suggest the most likely business objective of a traditional record store is survival.

Another name for a business objective is an aim or a goal.

Time for a little role play.

Imagine you are the owner of the shop shown in the picture.

What are you hoping to achieve by running the business in the next 12 months? There is no one right answer here as you been given very little information.

Just come up with a likely business objective for the shop – and a reason to backup your “guess”. Suggested answers to follow.

Do you know what a recession is?

If you do have you been effected by it?

Please look at this article about a paperboy being made redundant.. (News clip)

This may highlight how the effects can trickle down to all goods; or is it a change in how we receive goods?

How many of you have a paper delivered?  Or milk?  (And this week post!)

Spending time finding out about customers and competitors – rather than getting on with the business of making and then try to sell goods and services – can seem like a poor use of time.

Some entrepreneurs believe it is better to save time and money and ignore planning and analysis and rely instead on their gut instinct.

They launch products they believe customers want.

Poor research and planning is a major cause of business failure.

There is an alternative. draw up a business plan. A business plan is a report that contains market research findings and explains why the firm hopes to succeed. There will be sections on the size of the market, current competitors, and expected future income from sales

Drawing up a business plan forces owners to think about their aims, the competition, financial needs and likely profits. Business plans help reduce the risk and and uncertainty of running a business. They can even help persuade a bank to lend money.

As the saying goes: fail to plan; plan to fail

Lets start with risk.  An entrepreneur takes risks when they set out in business.  The reward for this is profit.  The easiest business to set up is a Sole trader, where the entrepreneur makes all the decisions and as the only owner gets to keep all the profit. As they are responsible for all decisions if the business fails they run the risk of not only loosing their investment, but anything else to cover the total business debts.   This is called unlimited liability. 

So what is a company?  Well the entrepreneur may want to raise some more capital and sell shares to an investor.  The investor may think that the proposal will give them a better return than a savings account so is happy to take a risk.  They may not want to work in the business so would not invest if they had unlimited liability.  By forming a company (LTD) and registering with companies house any shareholder now only risk loosing the total amount of their investment, i.e. limited liability.  Limited liability has been attributed with the success of the free market economies for the past 200 years.

Questions

What are the disadvantages of forming a company?

In what circumstances would you consider becoming a PLC?

There is no right or wrong answers in location.  The are many factors to consider.  This is a classic examination analysis question where points can be gained by weighing up the pros and cons of the location with the objectives of the business and its target audience.

Task.  Can you think of some factors you may need to consider?

Rather than asking Kirsty and Phil  try this hand resource from the Times.

You may have heard about some industrial action in the news recently.  You can find the news article here.

Have a look at it and then answer the following questions:

1.What is going to happen?

2.What reason do unions give for striking?

3.What is a union?

4.What problems will this cause for consumers?

5. What problems will this cause for other businesses?

6. Finally, who owns the post office?  Why may this ownership be significant in determining the outcome of the strike?

1)The difference between CPI and RPI,- CPI includes the changes in prices of mortgages and loans.

2) Segmentation is dividing the market up into similar characteristics, like sex.

3) Customer is the person who buys the product, the consumer is the person who uses it.  They may not be the same person!

Now lets think about entrepreneurs, adding value and brands using the Bedlam Cube.  You may have seen this cube before – a bit like the Rubik’s cube but harder.  (Confession i had to buy the book to solve the original Rubik’s puzzle in 1983!)

You can see the product on a early version of Dragons Den here.  Please look at the clip and answer some questions.

1) The clip clearly shows the entrepreneur is very driven, but what has he created? 

2) Is this products surely not a bit of plastic or wood, therefore   the materials would only cost a few pence so why is the product much dearer?

3) What is adding value?

4) What is a brand?

Finally what ever happened to the women on the original Dragons Den line up?

• a franchisee who buys the right from a franchisor to copy a business format
• a franchisor who sells the right to use a business idea in a particular location

An entrepreneur considering options when setting up a new business such as a sandwich shop has a choice. option number one is to set up as an independent retailer with its own menu, logo and restaurant layout.

Customers passing by or walking in unfamiliar with the shop and its products. They are unsure about the quality. Independent retailers have to trade to win customer loyalty.

Buying into a franchise such as subway gives a new business a head start as many customers are already familiar with the national well-known brand.

Shoppers know what to expect. This is the reason why branding is successful – customers have confidence in a known product.

However can you see the main drawback of franchising? Take a look at the subway site inviting you to join their venture. You may be surprised how much it costs to become a franchisee and share your profits in return for tying in with a successful business brand.

And please do not write a cheque without your parent’s permission first unless of course you’re over 18 years of age

At CNS year 11 students have been looking at monetary policy and asked to look at the latest inflation figures.

The Consumer Price Index (CPI) measure of annual inflation fell to 1.1% in September from 1.6% in August.

Q.  What is the difference between this measure and RPI (retail price index)?

This was its lowest level since September 2004.  This falls below the Bank of England target of controlling inflation to 1% of the 2% target.

Q.  Why would this be a problem for – consumers and businesses?

Q.  What can the Bank of England do to stop the decrease?

The fall was mainly due to gas and electricity bills which were unchanged between August and September this year but had risen a year ago. There was also downward pressure on prices from food and non-alcoholic drinks which fell by 0.9% between August and September. Other effects came from lowering prices in restaurants and hotels and DVDs.

Q  Why have these prices fell?

Answers at the end of the week!