Market Share Essay

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Pages: 6
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Business Aims and Objectives

Why are businesses set up?
[pic]
One of the main reasons businesses are set up is to produce and sell goods and services. Which is fine for the customers and consumers who want those goods and services, or products, but what of businesses themselves? What do they get out of it all? Businesses have their own aims and objectives for what they do. • Aims are general statements of what the business wants to achieve, like Virgin wanting to be the most recognised brand in Britain, rather than the third most recognised brand, or GAP wanting to be the biggest seller of jeans in the UK • Objectives are measurable targets that the business must meet in order to achieve its aims

So, for Virgin to achieve the aim of becoming the most recognised brand in Britain it must increase people’s awareness of the Virgin brand, perhaps by setting itself the objective or target of having an advertisement on prime time television three times a week. In order to become the biggest seller of jeans in the UK, GAP must find out how many jeans other retailers sell and set itself the target of selling more.
Many of the aims of a business are specific to that business or type of business. While wanting to be the biggest seller of jeans in the UK is logical for a business like GAP, it makes no sense as an aim for Vodaphone, which provides mobile telephone services. The following aims, however, generally apply to all businesses.

Making a profit
All business activity costs money. Businesses have to pay for items such as raw materials, wages and salaries, and other running costs. To cover their costs, businesses must sell the goods and services they produce. If the income a business receives from selling its products is less than its costs, the business will make a loss. If the income of a business is the same as its costs, the business will break even. If its income is greater than its costs, the business will make a profit. Obviously, no business can continue making a loss since it will be unable to pay for the items it needs. Any profit that a business makes, however, can be • Distributed among the owners of the business • Put back (reinvested) into the business to finance continued operations or future development • Used to pay off any loans to the business • Some must be paid to the government in tax

So making a profit is a main aim of most businesses as it is this that provides the owners of the business with their reward for putting money into (investing in) the business, and also enables the business to develop and become more successful. Not all businesses aim to make a profit, however. Organisations, such as the National Health Service, and the Police Force are paid for by the government and provide their services free to the people who use them. Similarly, non profit-making organisations and charities such as the National Trust which are financed from donations from the general public do not aim to make a profit. Any excess of income over expenditure is used to further the work of the organisation.

Increasing market share
The market for a product is the system of buyers and sellers of that product. All businesses operate in the markets for their products. The more buyers, or customers, a business has for its product the higher the volume of sales it will achieve. Higher sales mean more income and therefore profit. [pic]
The market share that a business has is the value of its sales as a proportion of the total sales by all businesses operating in that market. In order to make more profit another aim of most businesses is therefore to increase its market share.

Providing goods and services
Businesses can only make sales by providing goods and services. These are what customers buy and provide the business with an income. The goods and services that businesses provide must therefore be what customers want, and sold at a price that
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