GCSEBusinessEdexcelRevision Notes2. Building a Business2.1 Growing the BusinessChanges in Business Aims & Objectives

Changes in Business Aims & Objectives (Edexcel GCSE Business)

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Steve Vorster

Written by: Steve Vorster

Reviewed by: Jenna Quinn

Why Business Aims & Objectives Evolve

  • Topic 1.3.1 introduced aims and objectives for businesses starting up

  • As a business grows in size and evolves its objectives can change

    • These objectives are often influenced by various internal and external factors 

  • These changes are often necessary to ensure that the business remains competitive, profitable, and compliant with regulations

Factors Which Cause Business Objectives to Evolve

Factor

Explanation

Example

Market conditions

  • Market conditions such as competition, demand, and changing consumer price sensitivity can have a significant impact on a business's aims and objectives

  • Uber and Lyft were initially focused on capturing the largest share of the ride-hailing market (market share)

  • As competition intensified, both companies shifted their focus to profitability, and their objectives changed accordingly (profit maximisation)

Technology

  • A business may shift its focus from traditional brick-and-mortar retail to online retail as technology allows for a more cost-effective way to reach customers

  • Amazon began as an online bookstore, but as technology advanced, it expanded into a wide range of retail categories such as electronics, clothing and groceries

  • Their objective changed from increasing market share to market development

Performance

  • If a business is not meeting its sales goals in on area, it may change its objectives to try an improve its financial performance

  • In some cases this may involve retrenchment (moving out of existing markets)

  • In 2018 Ford announced that it was shifting its focus away from producing passenger cars and focusing more on SUVs and trucks

  • The move was driven by the company's poor financial performance and the new objectives were aimed at improving sales and profitability

Legislation

  • A company may need to shift its focus to comply with new regulations or capitalise on new opportunities created by changes in legislation

  • With the passage of the Affordable Care Act in the USA in 2014, healthcare providers had to adjust their aims and objectives to comply with new regulations and take advantage of new opportunities created by the law

Internal reasons

  • Factors such as changes in management or the company culture can also influence a business's aims and objectives

  • In 2014 Microsoft appointed Satya Nadella as the company's CEO

    • He shifted the company's focus from software to cloud services and the company's objectives changed accordingly

How Business aims & Objectives Often Evolve

2-1-5-how-business-aims-and-objectives-often-evolve

The evolution of business aims and objectives

Focus on survival or growth

  • A start-up may initially aim to survive by breaking even and becoming profitable

  • As the company grows and becomes more established its objective may change to focus on growth

    • This may include expanding into new markets or investing in new products or services

Entering or exiting markets

  • A company may decide to enter a new market to expand its customer base or to diversify its products

  • Conversely, a business may decide to exit a market if it is not profitable

Growing or reducing the workforce

  • A growing company may need to hire additional employees to support its expansion

  • Conversely, a company may decide at any point to reduce its workforce to cut costs or streamline operations

Increasing or decreasing product range

  • A company may choose to increase its product range to expand its customer base or to stay competitive in the market

  • Alternatively, a company may decide to decrease its product range if certain products are not proving to be profitable 

Examiner Tips and Tricks

It is tempting to write about the full range of factors that have led to a change in business objectives but you only need to cover two or three in some depth.

Make sure that you are making a clear point, using case study material to apply your point and developing an explanation with connectives such as '..this leads to' or '..as a consequence...'. 

In longer answers, you should look at both sides, considering advantages and disadvantages or reasons for and against. 

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    Author
    Reviewer
    Steve Vorster

    Author: Steve Vorster

    Expertise: Economics & Business Subject Lead

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.

    Jenna Quinn

    Author: Jenna Quinn

    Expertise: Head of New Subjects

    Jenna studied at Cardiff University before training to become a science teacher at the University of Bath specialising in Biology (although she loves teaching all three sciences at GCSE level!). Teaching is her passion, and with 10 years experience teaching across a wide range of specifications – from GCSE and A Level Biology in the UK to IGCSE and IB Biology internationally – she knows what is required to pass those Biology exams.