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Chapter 32 - Changes In Aims & Objectives - Edexcel GCSE Business

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Published in: Business | Business Strategy | Business Studies
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Revision summary of Chapter 32 - Changes in aims & objectives of the Edexcel GCSE Business syllabus.

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  1. CHANGES IN AINS & OBJECTIVES CHAPTER 32 'Ill
  2. Learning Objectives Learning objectives Explain why aims and objectives change as businesses evolve Discuss how aims and objectives change as businesses evolve Evaluate the different causes for change in objectives
  3. OBJECTIVES Definitions An aim is the overall long-term target or goal of the business Objectives are the short-term steps a business needs to take to meet its overall aims A business may have several different objectives that will help it to meet its aim Importance Aims and objectives give a business direction and provide a purpose for what the business does each day How objectives changelevolve over time • focus on survival or growth entering or exiting markets growing or reducing the workforce • increasing or decreasing product range.
  4. WHY DO mns & OBJECTIVES CHANGE OVER TINE?
  5. NARKET CONDITIONS Explanation I-Iber (YR Factors such as competition, demand, and changing consumer price sensitivity can have a significant impact on a business's aims and objectives These are typically external factors (outside the business' control) - they can't change the situation, they can simply adapt to it Example Uber and Lyft were initially focused on capturing the largest market share As competition intensified, both companies shifted their focus to profitability, and their objectives changed accordingly market share profit maximisation
  6. TECHNOLOGY Explanation Businesses may switch away from traditional operations to online retail (e-commerce) Technology allows for a more cost-effective way to reach (more) customers amazon Example Amazon began as an online bookstore, but as technology advanced, it expanded into a wide range of retail categories such as electronics, clothing and groceries market share market development
  7. PERFORNANCE Explanation • If a business is not meeting its sales goals in on area, it may change its objectives to try an improve financial performance • In some cases this may involve retrenchment (moving out of existing markets) Example • In 2018 Ford announced that it was shifting its focus away from producing passenger cars and focusing more on SUVs and trucks The move was driven by the company's poor financial performance and the new objectives were aimed at improving sales and profitability market share profitability
  8. LEGISLATION Explanation A company may need to shift its focus to either 1. Comply with new regulations 2. Capitalise on new opportunities created by changes in legislation Example With the passage of the Affordable Care Act in the USA in 2014, healthcare providers had to adjust their prices and, consequently, aims and objectives to comply with new regulations which made insurance more affordable
  9. INTERNAL REASONS Explanation Factors such as changes in management or the company culture can also influence a business's aims and objectives Microsoft Example • In 2014 Microsoft appointed Satya Nadella as the company's CEO He shifted the company's focus from software to cloud services and the company's objectives changed accordingly
  10. HOW BUSINESS AIRS & OBJECTI SOFTEN EVOLV
  11. FOCUS ON SURVIVAL OR GROWTH A startup may initially aim to survive by breaking even and becoming profitable As the company grows and becomes more established its objective may change to focus on growth - expanding into new markets or investing in new products or services LAURA ASHLEY SINCE 1953 Example Laura Ashley was close to collapse in 1999 when Knoo Peng became chairman The aims of the business were changed to reduce costs by reducing stores • In 2016 sales rose 16% with 13 less stores and profits of E25m
  12. ENTERING OR EXITING NARKETS A startup may initially aim to survive by breaking even and becoming profitable As the company grows and becomes more established its objective may change to focus on growth - expanding into new markets or investing in new products or services Conversely, a business may decide to exit a market if it is not profitable TM Example: Starbucks • In 1999, Starbucks opened its first shop in China Over the next thirteen years, they opened 570 stores in 48 cities. These numbers clearly reflect how enormously successful they were
  13. GROWING OR REDUCING THE WORKFORCE A growing company may need to hire additional employees to support its expansion Conversely, a company may decide at any point to reduce its workforce to cut costs or streamline operations. This is known as downsizing. 00 Meta Example: Neta After declaring 202 3 the "year of efficiency", Meta laid off more than 10,000 employees in 2022 across WhatsApp, Instagram and more
  14. INCREASING OR DECREASING PRODUCT RANGE A company may choose to increase its product range to expand its customer base or to stay competitive in the market Alternatively, a company may decide to decrease its product range if certain products are not proving to be profitable Benefits of shrinking product range • It is expensive to produce a wide variety of products, and choosing to supply only a few leads to cost reductions, more efficiency and hence increased profitability Example: Apple After more than 20 years, Apple chose to discontinue the iconic iPod, simply because its initial purpose (music streaming) could already be fulfilled by phones
  15. Practice questions : A catering business has invested [40.000 in moving to premises three times the Size Of its : existing site in Leeds. Salt's Catering launched in • 2012 and has now rowed to a 4.200 sq ft unit at • Wellington Road Industrial Estate. It delivers to a : Corporate base across Leeds and Bradford. and also provides catering for weddings. conferences : and private functions. Bruce Salt. a director at Salt's Catering. : said: •one Of the main causes Of our growth : has been the way we have moved into new : markets. While corporate catering is still the lifeblood of the business. in the last couple of . years we have teamed up with venues across : Yorkshire 10 provide catering for weddings : and conferences. while also securing a : large proportion of our work through private . functions He added: •The new unit gives us the scope to grow by another per cent, We are looking to invest an additional E50.OCC in new equipment and building improvements so we really feel we are in our strongest position yet to take on bigger orders. more ambitious events and larger : catering contracts: Source: wwwlhebusinessdeskcom. 2B January 2015 Total; 20 marks I Outline one Way in Which the Of extra investment could have been financed. 121 2 Outline one reason why Salt's Catering has had to evolve SO quickly, 3 State the Sum Of money Salt'S Catering plans to spend on new equipment and building improvement. Analyse how Bruce Salt's aims and objectives have changed over time, Bruce Salt •s big question is Whether to expand into new markets in EU countries. He sees two options: • Option I: Open new sales outlets in France and Germany. relying on the good English spoken widely by French and German businesspeople. • Option 2: Hire a new team of French- and German-speaking sales staff Of these options he Justify Which one should choose.
  16. End of chapter exercises 1 Why might a business change its objectives in response to a boom in demand for its products? 2 Why might the managers of a British retail chain such as Topshop decide to enter the clothing market in China? . 3 (a) Using Figure 32.1 on page 159. calculate the percentage increase in sales of cosmetics in China between 2010 and 2015. (b) Between 2010 and 2015 prices rose in China by 20 per cent. Explain how that is relevant when thinking about sales figures. . 4 Read the following extract. Explain how leadership changes might affect the 5 aims and objectives Of a business such as AG Foods. After its chief executive left suddenly. AG Foods plc appointed a new boss. She believes that the company must focus on healthier foods and drops two product lines that are exceptionally high in fat and calories. Following that approach will result in 120 job losses but ensures that the company is seen as being serious about good nutrition. Her main focus is: •to create certainty by focusing on brands we can be proud Of, not on products that might embarrass the company'. Discuss how AG Foods' stakeholders might feel about the change in the aims and objectives proposed by the new boss.
  17. 250 200 150 88.9 100 50 204.9 162.5 134 110.3 2010 2011 2012 2013 2014 2015 Figure 32.1 Sales of cosmetics in China, 2010—15 (Source: National Bureau of Statistics, China)

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