Page 62 - Cambridge IGCSE Business Studies

Cambridge IGCSE Business Studies Section 1 Understanding business activity

KEY TERMS Corporate social responsibility has become an important objective for
businesses as a result of:
Corporate social responsibility
(CSR): businesses taking ■ the activity of pressure groups
responsibility for the impact their
■ the media, which has created a greater awareness of social, ethical and
activities might have on society
environmental issues among consumers
and the environment.
■ the role of trade unions and other worker representative groups
Pressure group: organisations
of like-minded people who put ■ the role of governments and the laws they pass at local, national and international
pressure on businesses and level.
government to change their
policies to reach a predetermined
objective.
ACTIVITY 5.2
Peter and Petra are celebrating their third year in business together. They
are qualified accountants who decided to go into partnership in 2010. They
rented offices in the country’s largest city and, starting with just two clients, PP

Accountancy Services (PPAS) was born.
In the early days their main objective was survival. The market for accountancy
Pressure groups: see
Chapter 25, page 320. services in the city was very competitive. They knew that it would take time to
build up a list of clients and they were prepared to work long hours with little pay.
Trade unions: see
However, they hoped that once PPAS was established it would be a success. Aft er
Chapter 7, page 103.
three years of hard work and providing a quality service to clients, PPAS was a very
successful business. Peter and Petra employ five other qualified and partly qualified
accountants as well as secretarial support staff .
Peter and Petra are considering opening a new office in the country’s second

60 largest city. Growth has always been a long-term objective of the partners and they
are both excited about the expansion to their business which will be financed by a
$20,000 bank loan.
In pairs or as a class, discuss:

1 Why was survival the main objective for PPAS in its early years?
2 Other than survival, identify three objectives that Peter and Petra set
TOP TIP for PPAS.
Don’t just learn a list of business
3 How and why have the objectives for PPAS changed over its first three
objectives. You must make sure
years?
you know why an objective is
important to a business. 4 Why do some businesses not have growth as one of their objectives?

Objectives of social enterprises
KEY TERM Social enterprises are businesses mainly concerned with social objectives.
Their activities relate to the needs of the community and the environment.
Social enterprise: a business They have profit as an objective, but unlike other private sector businesses you
with social objectives that
have studied so far, the profit is reinvested in the business. This allows social
reinvests most of its profits
back into the business or into enterprises to expand their activities or benefit the local community, rather
benefiting society at large. than earning high profits for owners or shareholders. Social enterprises still
need to choose a legal structure for their business and many choose to operate
as a limited company or cooperative.
You will find social enterprise organisations in many countries throughout the

world. They are sometimes small locally based businesses, but others can be very

large as shown in the case study below.