Changes in business aims and objectives — Edexcel GCSE Business
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Changes in business aims and objectives explained
Changes in business aims and objectives covers 2 specification points, including ● in response to: market conditions,… and ● focus on survival or growth ● entering or….
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Open a point below for its explanation and revision guidance.
Why business aims and objectives change as businesses evolve: ● in response to: market conditions, technology, performance, legislation, internal reasons.
As businesses evolve, their aims and objectives must adapt to internal and external pressures. External market conditions, such as a recession or new competitors, might force a shift from profit maximisation to survival. Rapid changes in technology require businesses to update objectives, perhaps aiming to increase e-commerce sales. Poor financial performance often triggers a change in direction to cut costs or improve cash flow. Furthermore, new legislation, like stricter environmental laws or minimum wage increases, can force a business to alter its ethical or financial targets to ensure compliance. Finally, internal reasons, such as a change in leadership or a desire to improve corporate culture, can redefine a company's strategic focus.
How business aims and objectives change as businesses evolve: ● focus on survival or growth ● entering or exiting markets ● growing or reducing the workforce ● increasing or decreasing product range.
When a business evolves, the practical ways its objectives change are visible in its strategic actions. A start-up may initially focus on survival, but as it establishes itself, the primary aim often shifts towards growth. Conversely, an economic crisis might force a return to survival mode. Evolution also dictates whether a business aims at entering new markets to expand its customer base or exiting unprofitable markets to consolidate resources. Furthermore, these shifting aims directly impact human resources, leading to objectives focused on growing or reducing the workforce. Finally, a business might alter its operational targets by increasing its product range to diversify risk or decreasing it to focus on core, profitable items.
Your focus
- Identify the internal and external factors that cause business aims to change.
- Explain how specific changes in market conditions or technology influence strategic objectives.
- Analyse the impact of new legislation and business performance on corporate aims.
Show all 6 objectives
- Describe how a business shifts its focus between survival and growth as it evolves.
- Explain the strategic reasons for entering or exiting specific markets.
- Analyse how changing objectives lead to growing or reducing the workforce and altering the product range.
Changes in business aims and objectives exam tips
Marking Points
- Explain how changing market conditions, such as economic downturns, shift objectives from growth to survival.
- Analyse the impact of new technology on business aims, such as investing in automation to improve efficiency.
- Evaluate how poor financial performance forces a business to adopt cost-minimisation or retrenchment objectives.
- Assess the role of new legislation, such as environmental regulations, in forcing businesses to adopt compliance or sustainability targets.
- Identify internal reasons for changing objectives, such as a new chief executive implementing a different strategic vision.
- Explain how a business transitions its primary focus between survival during difficult periods and growth during prosperous times.
- Analyse the strategic decision to enter new markets for expansion versus exiting markets to minimise losses.
- Evaluate the impact of changing objectives on human resources, specifically the need for growing or reducing the workforce.
- Assess the rationale behind increasing a product range to spread risk or decreasing it to focus on core competencies.
Examiner Tips
- 💡Use the context provided in the case study to identify exactly which factor, such as technology or legislation, is driving the change in objectives.
- 💡When evaluating the impact of changing aims, always link the change back to the specific trigger, such as poor financial performance.
- 💡Remember that a change in objectives often requires a reallocation of resources, which can be used as an analytical point in longer answers.
- 💡Link the 'how' (such as reducing the workforce) to the 'why' (such as poor financial performance) to build strong analytical chains in your answers.
- 💡Use the specific actions mentioned in the case study, such as launching new products, as evidence of a business shifting its objectives towards growth.
- 💡Consider the negative impacts of these changes, such as the effect on employee motivation when the objective shifts to reducing the workforce.
Common Mistakes
- Error: Confusing internal reasons with external market conditions. Correction: Clearly distinguish between internal factors like a change in management and external factors like competitor actions.
- Error: Assuming aims only change when a business is failing. Correction: Recognise that successful performance can also cause aims to change, such as shifting from survival to rapid expansion.
- Error: Stating that legislation only affects costs. Correction: Explain that legislation can fundamentally change strategic objectives, such as forcing a shift towards environmentally sustainable practices.
- Error: Assuming growth is always the ultimate objective for every business. Correction: Acknowledge that survival or consolidation can be the primary objective during economic downturns or periods of intense competition.
- Error: Treating entering and exiting markets as purely financial decisions. Correction: Explain that these decisions are strategic objectives tied to the broader evolution and risk profile of the business.
- Error: Stating that reducing the workforce is only a sign of business failure. Correction: Recognise that reducing the workforce can be a strategic objective to improve efficiency, often linked to automation.