2.1 Growing the Business- (2.1.2 only Aims & Objectives set 2 of 4) Flashcards

2.1.2 - Changes in business aims and objectives

1
Q

2.1.2 - Explain the 5 reasons businesses aims and objectives may change.

A
  • Market conditions; this includes the size of the market and the degree of competition. As competitors enter and exit the market a business may need to adjust its aims and objectives, for example if a new competitor enters a business may need to change its aim to survival rather than expansion.
  • Technology; as technology is constantly changing a business may adjust its aims and objectives to take advantage of new opportunities as a result of the development of a new technology.
  • Legislation; a business must comply with legislation, as such if laws change a businesses aims and objectives must change to, for example if the minimum wage is increased, this might affect a business profit maximisation aim.
  • Performance; This can be in relation to financial objectives such as, profit, cash flow, market share or non financial such as productivity or customer reviews. If a business meets the benchmarks it may adjust upwards, equally if a business is struggling it may review the aims and adjust appropriately.
  • Internal reasons; Changes within a business can also affect the aims and objectives, this can include changes to senior positions such as the CEO who may have a different philosophy and adjust the aims and objectives, or it could refer to staff culture or attitudes of workers.
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2
Q

2.1.2 - As a business evolves, explain 4 ways their aims and objectives may change?

A
  • Focus on survival or growth; often in times of economic downturn a business may focus on survival, or in a period of prosperity focus on growth
  • Enter or exit markets; entering new markets is a way for a business to expand but in times of survival a business may choose to leave a market, by downscaling for example also known as retrenchment.
  • Grow or reduce the workforce; in times of expansion and growth the business may decide to increase the number of employees, but in times of difficulty the business may reduce the number of employees,
  • Increase or decrease the product range; decreasing the product range is an example of retrenchment, and increasing the product range would be a method of expansion.
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3
Q

2.1.2 - Idenitfy 6 examples of targets for a business focusing on survival.

A
  1. Decrease the product range
  2. Exit markets
  3. Achieve a break-even level of sales
  4. Improve efficiency
  5. Maintain market share
  6. Reduce costs; eg close stores, reduce the workforce
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4
Q

2.1.2 - Idenitfy 8 examples of targets for a business focusing on growth.

A
  1. Expand the product range
  2. Enter new markets
  3. Increase sales
  4. Increase profits
  5. Increase market share
  6. Takeover another business
  7. Open new stores
  8. Increase the workforce
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5
Q

2.1.2 - Define th term ‘retrenchment’.

A

Retrenchment refers to when a business downsizes it operations. This can include reducing the workforce, exiting a market, decreasing the product range or closing branches for example.

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