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.
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.
3
Q
2.1.2 - Idenitfy 6 examples of targets for a business focusing on survival.
A
- Decrease the product range
- Exit markets
- Achieve a break-even level of sales
- Improve efficiency
- Maintain market share
- Reduce costs; eg close stores, reduce the workforce
4
Q
2.1.2 - Idenitfy 8 examples of targets for a business focusing on growth.
A
- Expand the product range
- Enter new markets
- Increase sales
- Increase profits
- Increase market share
- Takeover another business
- Open new stores
- Increase the workforce
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.