Reasons for a Business Changing Its Objectives

Business objectives are the stated, measurable targets that a company intends to achieve over a specified period. They provide direction and a benchmark for measuring success. However, business environments are dynamic, often necessitating a change in objectives. Several factors can contribute to this:

Achieved Current Objectives

One obvious reason is the achievement of existing objectives. Once a business successfully meets its targets, it's natural to set new ones to strive for further growth and development. For example, if a new bakery aimed to achieve a 10% market share in its first year and successfully achieved this, it might then set a new objective of opening a second branch in year two.

Changing Economic Conditions

Economic fluctuations can significantly impact business decisions. A recession, for instance, might force a business to shift from expansion objectives to focusing on cost-cutting and maintaining market share. The 2008 financial crisis, for example, led many businesses to scale back expansion plans and prioritize financial stability.

Changes in Legal Controls/Rules

New legislation or regulations can necessitate a change in objectives. For example, if new environmental regulations are introduced, a manufacturing company might have to adjust its production processes and adopt more sustainable practices, impacting its short-term profitability objectives.

Changes in the Market

The business world is constantly evolving. The entry of new competitors, changes in consumer demand, or the emergence of new technologies can all force businesses to adapt their objectives. The rise of e-commerce, for instance, forced many traditional retailers to develop online platforms and adjust their marketing strategies.

New Owners

A change in ownership often brings a change in vision for the business. New owners may have different risk appetites or long-term goals, leading to a shift in objectives. For example, if a family-owned business is sold to a venture capitalist firm, the focus might shift from long-term stability to rapid growth and a higher return on investment.

Growth of Business

As a business grows, its objectives may need to evolve to reflect its increased size and resources. A small startup focused on survival might, after a period of rapid growth, shift its focus to building a strong brand reputation and expanding into new markets.

Change in Capital Available

Access to capital is crucial for business operations and expansion. If a business secures a significant investment or faces difficulties obtaining loans, it will affect its investment and growth objectives. For example, a company that had planned to expand its factory might have to postpone these plans if it experiences difficulty securing the necessary financing.

Conclusion

In conclusion, business objectives are not static; they must be flexible and adaptable to the ever-changing business environment. By understanding the factors that necessitate change, businesses can proactively adjust their targets, ensuring continued relevance and competitiveness in the market.