Reasons why Business Objectives may Change (Edexcel IGCSE Business)

Revision Note

Written by: Lisa Eades

Changes in Business Objectives

Business objectives may change over time due to a number of internal factors
- As a business grows its objectives may change from survival to profit or sales maximisation
- Retiring business owners may choose to spend less time running the business
  - Its objective may change from increasing market share to maintaining financial security
- A new leader or manager may set challenging targets or implement their preferred social objectives
- Business performance can require a change in objective
  - E.g. A business that has succeeded in becoming the market leader may now decide to focus on maximising profit
Businesses may also need to change their objectives in response to external factors

Impact of External Factors on Business Objectives

External Factor	Explanation	Example
Market conditions	Market conditions include the level of competition in a market and its rate of growth Increased competition may prompt a change in objective from maximising profit to maintaining market share In fast-growth markets businesses are likely to pursue objectives of maximising sales and profits If market growth is slowing objectives may focus on growing market share rather than increasing sales	In the face of increased competition Maxi's Fahrschule in Lübeck has reduced prices in order avoid losing its learner driver customers to cheaper rivals
Technology	New production technology may support a profit maximisation objective as manufacturing costs are likely to fall as output rises Improvements in e-commerce software may help increase sales Investment in robots could allow manufacturing businesses to improve working conditions for their employees	Following the launch of JustEat and UberEats services in the Amsterdam region the Vegan Junk Food chain has been able to focus on increasing profits to fund the opening of new outlets in Germany and Spain
Legislation	Legislation refers to laws or regulations that compel individuals or organisations to behave in a desired way New laws may increase business costs and force the firm to focus on increasing sales volumes The introduction of new regulations to protect the environment has increased business emphasis on social objectives such as reducing their carbon footprint	In 2023 the EU ban on many single-use plastics increased costs for businesses such as France's SEF Packaging which had to research new materials and invest in new production processes whilst accepting it would achieve lower profit margins

Examiner Tips and Tricks

You may be asked to outline an impact of changing business objectives. Look for clues in the case study about the effects on stakeholders such as employees, owners or suppliers. You will need to use this context to support your answer.

Last updated: 10 October 2024

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