Changes in business aims and objectives

Welcome to the Journey of Growing a Business!

In Theme 1, we learned how small businesses start up with the main goal of just surviving. But once a business gets past those first tricky years, it enters the "Growing the Business" phase (Theme 2). Just like you might change your goals from "passing a test" to "getting a grade 9," businesses have to change their aims and objectives as they evolve. Let's dive into why and how this happens!

1. Why do Business Aims and Objectives Change?

Think of a business like a ship at sea. If the weather changes or the engine gets stronger, the captain might change the destination. There are five main reasons why a business might change its goals:

A. Market Conditions

The "market" is just where buyers and sellers meet. If a new, scary competitor moves in across the street, a business might change its objective from growth back to survival. Alternatively, if a competitor goes bust, the business might suddenly aim to grab all those new customers.

B. Technology

Technology moves fast! A business that used to aim for "high street sales" might change its objective to "achieving 50% of sales online" because of e-commerce. Example: Think about how Netflix changed from posting DVDs to streaming videos. Their whole objective shifted because the technology changed!

C. Performance

How well is the business doing?
• If things are going great: The business might move from financial security to market dominance.
• If things are going badly: They might have to stop thinking about profit and focus purely on survival and cutting costs.

D. Legislation (The Law)

Governments change laws all the time. If a new law says all packaging must be plastic-free, a business might have to change its objective to focus on environmental sustainability rather than just the lowest cost.

E. Internal Reasons

Sometimes the change comes from inside. Maybe there is a new CEO with a fresh vision, or the original owners have retired and sold the business to a big Public Limited Company (plc). New owners often bring new, more ambitious objectives.

Quick Review Box:
Aims change because of:
1. The Market (Competitors)
2. Technology (New gadgets/apps)
3. Performance (Success or failure)
4. Legislation (New laws)
5. Internal reasons (New bosses)

Memory Aid: Try the mnemonic "M.T.P.L.I" – Many Tall People Like Ice-cream! (Market, Technology, Performance, Legislation, Internal).

Key Takeaway: Businesses don't live in a bubble. When the world around them changes, their goals must change too, or they risk failing.

2. How do Aims and Objectives Change?

Now we know why they change, let’s look at how they actually shift. Don't worry if this seems like a lot to remember—it's mostly common sense!

Focus on Survival or Growth

When a business is tiny, it focuses on survival. Once it is stable, it shifts to growth (becoming bigger). However, during a recession (when the economy is struggling), even a big business might switch back to a "survival" objective to protect its cash flow.

Entering or Exiting Markets

A business might decide to enter a new market (like Dyson moving from vacuum cleaners into hair dryers) to find new customers. Or, if a certain part of the business is losing money, they might exit a market (stop selling a product or close shops in a certain country) to save the rest of the company.

Growing or Reducing the Workforce

If the objective is growth, the business will need to hire more people. But if the objective is efficiency or cost-cutting, they might reduce the workforce. This is often called downsizing.

Increasing or Decreasing Product Range

Businesses often change their objectives by looking at what they sell:
• Increasing range: Adding new products to keep customers interested (like Apple adding the Apple Watch).
• Decreasing range: Cutting out products that aren't selling well to focus on their "star" items.

Did you know?
Coca-Cola owns over 500 different brands! They are constantly "increasing" their range by buying other drink companies, but they also "decrease" it by stopping drinks that people don't buy anymore.

3. Common Pitfalls to Avoid

When answering exam questions, students often make these mistakes. Keep these in mind to get those top marks!

• Confusing Aims and Objectives: Remember, an Aim is a general long-term goal (e.g., "to be the best bakery in town"), whereas an Objective is a specific, measurable step to get there (e.g., "to increase sales by 10% this year").
• Thinking Growth is the Only Goal: Sometimes a business chooses to stay small to keep independence and control. Growth isn't always the answer!
• Ignoring the "External Environment": Always mention how things like legislation or technology force a business to change. They rarely change their goals for no reason.

Summary: The Big Picture

As a business moves from Theme 1 (Small) to Theme 2 (Growing), it becomes more complex. It has to balance making a profit with other objectives like market share and social responsibility. The key is flexibility—a business that refuses to change its objectives when the market moves will eventually be left behind!

Key Terms to Remember:
• Survival: Keeping the business running and avoiding bankruptcy.
• Market Share: The percentage of total sales in a market held by one business.
• E-commerce: Buying and selling goods and services over the internet.
• Legislation: Laws that businesses must follow.

Well done! You've just covered a major part of Topic 2.1. Keep going, and remember: business is all about reacting to the world around you!