2.1.2 Changes in Business Aims and Objectives

Question 1

How might technology cause business aims and objectives to change?

Answer 1

• objectives may be linked to the adoption of new technology or the innovation and invention of new products made possible by new technology
• common technological developments include:
  
  • website developments
  • manufacturing developments
  • software developments
  • mobile technology developments
  • contactless, online, and mobile payment system developments

Question 2

How might market conditions cause business aims and objectives to change?

Answer 2

• as new competitors enter the market or current competitors grow and become more competitive a business may change its objectives to become more competitive
• if a business is in a market where there is suddenly an increase in competition, its aims and objectives may have to change to focus on survival, which is when a business aims to keep its day-to-day operations running
• if a business is in a growing market, over time its aims and objectives may change to focus on growth

Question 3

How might business performance cause business aims and objectives to change?

Answer 3

• businesses will often look at where they can make improvements to their sales, revenue or profit, the impact of their marketing, or theirproductivity
• If a business has suffered with poor financial performance in the previous year, it may have aims and objectives relating to improving its sales, revenue or profit over the next financial year

Question 4

How might legislation cause business aims and objectives to change?

Answer 4

• if a new law is introduced or changed, eg if there is an increase in the minimum wage, a business may change its aims and objectives to accommodate this change
• may force a business to change its products and services - may restrict the business’s operations or create new opportunities that may be incorporated into its objectives

Question 5

How might internal reasons cause business aims and objectives to change?

Answer 5

• annual objectives reflect the previous performance of a business
• a change in working culture or the business’s leaders is also likely to influence its objectives so that they match the ambitions or personality of its managing director or chief executive officer (CEO)

Question 6

How might a focus on growth cause business aims and objectives to change?

Answer 6

over time, as a business becomes more recognised and achieves a secure position in the market, it may change its aims and objectives to focus on growth rather than survival

Question 7

How might a focus on survival cause business aims and objectives to change?

Answer 7

• established businesses in very competitive environments may be forced back into a position where survival becomes their main aim
  
  • this could be due to low sales, increasing competition, changes in trends and tastes, poor economic performance, or an overall change in market conditions

Question 8

How might entering new markets cause business aims and objectives to change?

Answer 8

• a common growth strategy for businesses is to enter new markets
• a new market could consist of a different age group or gender, or in some circumstances it could be customers in another country
• the aim of entering new markets is to grow the business overall, develop a newtarget market, and ultimately grow the business’s market share across multiple markets

Question 9

How might exiting new markets cause business aims and objectives to change?

Answer 9

• Exiting a market is seen as a survival strategy for a business usually due to:
  
  • a shrinking market
  • poor performance of the business products
  • a new market opening up
  • the business failing overall

Question 10

How might growing the workforce cause business aims and objectives to change?

Answer 10

• when a business is expanding and performing well, some of itsaims and objectivesmay focus on growing its workforce
• this may include opening new departments, creating new teams and recruiting more staff - by growing its workforce, a business gains more potential for expansion

Question 11

How might reducing the workforce cause business aims and objectives to change?

Answer 11

• reducing the workforce is usually part of asurvivalstrategy for a business
• when a business is not performing well or is exiting a market, it may reduce its workforce to help reduce its overall business costs
• however, occasionally, a reduction in a workforce is part of a business growth plan involving technology

Question 12

How might increasing the product change cause business aims and objectives to change?

Answer 12

• a business might increase its product range to compete with other businesses
• having a larger product portfolio allows businesses to manage theirrisk, because if a product is not performing well, the business can rely on its other products to producerevenue

Question 13

How might decreasing the product range cause business aims and objectives to change?

Answer 13

• when a product is not generating enough revenue or a business is failing, the business will often decrease its product range
• usually a business will do this either to allow them to focus on their existing products or to develop a new product range in a different sector

Question 14

How would business aims and objectives change for a growing business?

Answer 14

• focus on growth
• expand new product range
• enter new markets
• increase sales
• increase profits
• gain a larger market share
• open new stores
• increase the workforce

Question 15

How would business aims and objectives change for a struggling business?

Answer 15

• focus on survival
• decrease the product range
• exit markets
• achieve enough sales to break even
• improve efficiency
• maintain market share
• reduce costs e.g. close stores or reduce the workforce