IFP - BM - Week 4 - Unit 1 - Section 1.2 PDF

IFP: BUSINESS MANAGEMENT WEEK 4 - UNIT 1 SECTION 1.2 AUTUMN 2024 SEMESTER Week 4 Agenda: Vision, mission, and aims in business. Setting objectives for profit. Break-even analysis and its importance in decision- making. Group activity: Calculating break-even for a small business....

IFP: BUSINESS MANAGEMENT WEEK 4 - UNIT 1 SECTION 1.2 AUTUMN 2024 SEMESTER Week 4 Agenda: Vision, mission, and aims in business. Setting objectives for profit. Break-even analysis and its importance in decision- making. Group activity: Calculating break-even for a small business. Business Management in Real Life In your own words… what is the objective of this digital poster? Word Cloud submissions What is a Vision? What is a Vision? A vision describes the long-term future the company seeks to create. It’s aspirational, focusing on the desired outcome of the business. Example: Tesla's Vision: To accelerate the world's transition to sustainable energy. What is a Mission? What is a Mission? A mission statement explains how the company will achieve its vision through its core operations. It focuses on the company’s current purpose, values, and the value it brings to customers. Example: Google's Mission: To organise the world’s information and make it universally accessible and useful. Company Mission Statement will have: Its identity. Its philosophy, aspirations and values The scope of its markets. Customer needs that it must aim to satisfy. The approach it uses to satisfy its customers. What is the difference between Vision and Mission? Currently we have a class at 2pm on Saturday  Do you want to study Saturday from 12pm – 2pm? What Are Business Aims? Aims are general, long-term goals that flow from the vision and mission. They provide a broad direction for the company’s future. Example: Amazon’s Aim: may simply be to increase profitability, or to improve the efficiency of the operations and lower costs. What Are Business Objectives? Objectives are specific, measurable steps that help a business achieve its aims. They follow the SMART criteria: Specific, Measurable, Achievable, Relevant, and Time- bound. (Doran, 1981) Example: A retail company’s objective to increase profits by 15% in one year. Key Differences Between Vision, Mission, Aims, and Objectives: Vision: Long-term future ambition (e.g., Tesla’s sustainable energy goal). Mission: Current purpose and operations (e.g., Google organising information). Aims: Broad, general goals that guide strategy (e.g., Amazon’s customer focus). Objectives: Specific, measurable steps toward achieving aims (e.g., increasing profits). The Importance of Profit in Business Management Importance of Profit in Business Profit: The financial surplus after deducting total costs from revenue. A key objective for most businesses, guiding investment and growth decisions. Example: A retail business earning £50,000 in revenue with £30,000 in expenses, leaving £20,000 profit. Types of Profit Gross Profit: Revenue minus the cost of goods sold (COGS). Operating Profit: Gross profit minus operating expenses. Net Profit: Final profit after all expenses, including taxes, are deducted. Introduction to Break- Even Analysis Break-even: The point where total revenue equals total costs. Essential for pricing and profitability decisions. Example: A bakery must sell 500 loaves of bread to cover its rent and ingredient costs. Break-Even Formula Formula: Break-even point = Fixed costs / (Selling price per unit - Variable cost per unit) Fixed costs: Expenses that remain constant regardless of sales (e.g., rent, salaries). Variable costs: Expenses that fluctuate with production levels (e.g., materials, utilities). Group Activity (10 Minutes) Group Activity: Break Even Analysis In groups, choose a business (e.g., bakery, café, hairdresser) and calculate its break-even point. Identify fixed costs (rent, salaries) and variable costs (ingredients, packaging). Present your findings to the class. Example Break-Even Calculation Business: Local bakery with fixed costs of £1,000 and variable costs of £1 per loaf sold at £3 each. Break-even point: 500 loaves of bread. Shows how break-even analysis guides pricing and production decisions. Practical Decision-making for the Bakery Pricing decisions: Should the bakery increase its price to lower the number of loaves needed to break even? Cost control: Are there ways to reduce variable costs (e.g., cheaper ingredients) to reach the break-even point faster? Sales strategy: The bakery now knows it needs to sell at least 500 loaves a month to cover costs, so it can create a marketing strategy to meet that target.  Homework (To Prepare for Saturday Make-up Class) Activity 1.5 (Business Management Subject Guide) Most larger companies, especially PLCs, will have a mission statement in their advertising, on their website or in other material. Schools, colleges and universities will also have a similar statement that answers the question of why the organisation exists and how it intends to achieve its purpose. In your allocated group, find examples of three mission statements and analyse them to find out: Who is the target customer of the business? What product or service is provided to that customer? What is the distinct nature of the business (i.e. why should a client choose this organisation)? How persuasive do you think these statements are? ACADEMIC SUPPORT BUV LIBRARY All the information you need at BUV Library Website https://library.buv.edu.vn/ Library Search Box Research Tools E-Resource Guides in text and video Full Library Package Service For help: [email protected] ACADEMIC SUPPORT STUDENT ACADEMIC SUPPORT Your Peer Academic Partner https://buvsas.simplybook.asia/v2/ BUV Students with good results & academic conduct Selected & trained to provide 1-on-1 academic support to YOU!  Improve study skills  Support specific modules  Prepare for assignments & exams For help: [email protected]