Explain why the objectives of a business may change over time.
CAMBRIDGE
A level and AS level
Year Examined
October/November 2019
Topic
Strategic Management
👑Complete Model Essay
Business Objectives and Their Evolution
Business objectives are the stated, measurable targets that guide an organization towards achieving its overarching aims and purpose. These objectives, encompassing tactical, strategic, corporate, and departmental levels, provide a roadmap for decision-making and resource allocation. While a business may initially prioritize objectives like survival, growth, profit maximization, sales growth, or social responsibility, these can change significantly over time due to a multitude of internal and external factors.
Initial Objectives Achieved: Transitioning from Survival to Growth
In the nascent stages, a firm's primary objective is often survival. The focus lies in establishing a foothold in the market, building brand awareness, and generating sufficient revenue to cover costs. Once this survival stage is successfully navigated, objectives naturally transition towards growth. This could involve expanding the product/service portfolio, entering new geographic markets, or pursuing mergers and acquisitions. For instance, Amazon, initially an online bookstore, strategically diversified its offerings to become the e-commerce behemoth it is today. This shift in objectives was crucial for its sustained growth.
The Dynamic Competitive Landscape
The competitive environment is in constant flux, compelling businesses to adapt their objectives. The emergence of new competitors, disruptive technologies, or changing consumer preferences can all necessitate a strategic realignment. Consider the impact of smartphones on the camera industry. Traditional camera manufacturers had to drastically adjust their objectives, focusing on innovation and niche markets to remain competitive against the convenience and versatility of smartphones.
Leadership and Management: A Catalyst for Change
New leadership often brings with it a new vision, potentially leading to a shift in business objectives. A new CEO might prioritize different aspects of the business, such as sustainability, innovation, or global expansion. The appointment of Satya Nadella as Microsoft's CEO in 2014 saw a significant shift in the company's objectives, moving away from a predominantly Windows-centric approach to embracing cloud computing and mobile technologies.
Technological Advancements: Shaping New Possibilities
Technological advancements can dramatically alter the business landscape, creating opportunities for new products, services, and operational efficiencies. Businesses that fail to adapt to these advancements risk becoming obsolete. The rise of e-commerce, for example, forced many traditional retailers to re-evaluate their objectives, leading to the adoption of online platforms and omnichannel strategies to stay relevant.
Internal and External Growth Opportunities
As businesses mature, they may identify opportunities for internal and external growth, leading to a shift in objectives. Internal growth could involve increasing production capacity, investing in research and development, or developing new product lines. External growth might involve mergers, acquisitions, joint ventures, or expanding into international markets. Netflix's decision to invest heavily in original content production is a prime example of a business objective evolving to capitalize on internal growth opportunities in the streaming services market.
Economic Fluctuations and External Shocks
Economic downturns, global pandemics, or political instability can significantly impact business operations, forcing a reassessment of objectives. During the 2008 financial crisis, many businesses shifted their focus from growth to survival, prioritizing cost-cutting measures and debt reduction. Similarly, the COVID-19 pandemic led businesses to prioritize resilience, adaptability, and digital transformation to navigate unprecedented challenges.
Conclusion
Business objectives are not static; they evolve in response to a complex interplay of internal and external factors. From achieving initial goals to navigating competitive pressures, technological advancements, and economic uncertainties, businesses must constantly adapt their objectives to remain relevant and successful. Failure to do so can lead to missed opportunities, declining competitiveness, and ultimately, business failure. Understanding the dynamic nature of business objectives is therefore crucial for making informed decisions and ensuring long-term sustainability.
Sources:
* No specific sources were used for this essay. The information provided is based on general knowledge of business principles and examples are widely known.
Explain why the objectives of a business may change over time.
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Writing an A-Level Business Studies Essay: The Evolution of Business Objectives
This guide will help you write a compelling essay on the reasons why business objectives change over time. By the end, you'll have a solid understanding of the key concepts, a framework for your essay, and practical tips for maximizing your marks.
Understanding Business Objectives
Begin by defining what business objectives are:
- Stated, measurable targets that guide an organization towards its aims and purpose.
- Tactical, strategic, corporate, and departmental objectives exist, each with specific focuses.
- Common examples include survival, growth, profit maximization, sales growth, and socially responsible aspirations.
Factors Causing Changes in Objectives
Now, explore the reasons why objectives might shift over time. You can structure your essay around these key factors:
1. Initial Objectives Achieved
- A startup's initial focus might be on survival. Once established, the focus shifts to growth, expansion, or market share.
- Example: A new bakery might aim to become profitable within the first year. After achieving this, they may set new goals like expanding to a second location or introducing new product lines.
2. Competitive Environment
- Changes in competitors, new market entrants, or evolving consumer preferences can force businesses to adjust their objectives.
- Example: A local bookstore might have aimed for market dominance in its area. However, the rise of online retailers could force them to focus on developing an online presence or partnering with local cafes for events and community engagement.
3. New Leadership and Management
- Different leaders might have different visions and priorities, leading to revised objectives.
- Example: A new CEO with a focus on sustainability could steer the company towards goals that minimize environmental impact and invest in eco-friendly practices.
4. Technological Developments
- Advancements in technology can open new opportunities or disrupt existing business models, requiring objective adjustments.
- Example: A traditional printing company might need to adapt its objectives to incorporate digital printing services or online marketing strategies.
5. New Opportunities for Growth
- Internal and external growth opportunities, like mergers, acquisitions, or entering new markets, can lead to revising objectives.
- Example: A clothing brand might set a new objective to expand into international markets after successfully establishing itself domestically.
6. Economic/External Situation Changes
- Recessions, inflation, changes in government regulations, or global events can significantly impact business objectives.
- Example: A restaurant chain might shift its focus from expansion to cost optimization and customer retention during an economic downturn.
Writing Your Essay
Now that you have a good understanding of the factors influencing business objective changes, you can develop your essay:
Introduction
* Define business objectives and their importance. * Briefly introduce the factors that can cause them to change. * State your argument, emphasizing that objectives are not static and must adapt to dynamic environments.Body Paragraphs
* Dedicate one paragraph to each factor discussed above. * Provide relevant examples from real-world businesses or case studies. * Use academic language and connect your arguments to key business concepts.Conclusion
* Summarize your main points and reiterate your argument. * Emphasize the importance of flexibility and adaptability for businesses. * Consider offering a final thought on the future of business objectives in the context of ongoing technological advancements and global economic shifts.Tips for Success
* Use evidence: Back up your arguments with data, statistics, examples, or case studies from reliable sources. * Ensure clarity: Structure your essay logically, use clear transitions, and avoid jargon. * Proofread: Check for grammar, spelling, and punctuation errors to present a polished piece. * Relevance: Make sure your arguments directly address the essay question and demonstrate your understanding of the subject matter.By following this guide, you can craft a well-structured and informative essay that explores the dynamic nature of business objectives and their evolution over time. Remember, the key is to demonstrate your understanding of the underlying principles and their real-world applications.
Extracts from Mark Schemes
Explain why the objectives of a business may change over time.
Answers could include:
Explain business objectives
The stated measurable targets (tactical, strategic, corporate, departmental) that move an organisation to achieve its aims and purpose.
Objectives can include
survival, growth, profit maximisation, sales growth, socially responsible aspirations.
Changes may take place in response to:
- Initial objectives achieved (survival).
- Competitive environment.
- New leadership and management.
- Technology developments may suggest new production possibilities.
- New opportunities arise with internal and external growth such as multinational trade.
- Economic/external situation changes such as recession.