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2.1 Growing a Business
2.1.2 Changes in business aims and objectives
 Key elements to this topic

Why businesses How businesses

aims and aims and
objectives objectives
change change
 Theme 1 re‐cap
In theme 1, we studied what business aims and
objectives are and the different types of
objectives that exist in a variety of start‐up
businesses.
You have 30 seconds to:
1. Explain the difference between a business aim
and business objective
2. Explain the reasons why a business would set
business aims and objectives
 Let’s play Bingo!!!

1. On a piece of
paper, draw a 9 x 9
bingo grid
2. On the grid, insert
9 key business
objectives that you
can remember
from theme 1
On your bingo cards, write the answers to the
following task:

Name 9 key business

aims/objectives from theme 1

Start Bingo Set Your

Questions
Name 9 key business aims/objectives
from theme 1

Use space bar (or click mouse)

to scroll through bingo balls

Market Financial
Survival Profit Sales
Share security

Financial
Market
Personal
Control and
Social
Survival
Profit
Sales
Challenge
independence
satisfaction
security
Share
Personal Control &
Challenge Social independence
satisfaction
 Why business objectives change?

As a business grows, its aims and objectives will

change.

Established businesses may also change their

objectives in line with any changes in the external
environment. A business specialising in luxury
products might aim for strong growth in an
economy that is doing well, but may have to change
this to survival if the economy weakens or a strong
new competitor arrives in the market.
 Causes of change
Business
Performance

Technology Legislation

Market Business Internal

Conditions Objectives Reasons
 Complete the possible effects on the
business as a result of the change
What is Market conditions refers to the current situation in
meant by the the market that the business operates in e.g.
term
market
economic conditions, competition, changing tastes
conditions? and fashions

Possible
If there is increased competition or decreased
effects of this consumer wealth, this could mean meeting
…………… the
change on a business objective of increasing sales may be
business unachievable.

Objectives may change from maximising sales or

New objective
increasing market share to survival.
 Changes in technology
Change in
technology
Advances in technology, such as new IT capabilities

A manufacturing business has a long term objective of profit

Possible maximisation. The company invests in new robotic technology
effects of this to improve efficiency and output in the factory. Investment
Investmentin
in
change on a
increase costs in in
new technology will increase………….. thethe
short term.
term.
short
business

Profit targets reduced, as a result of the increased cost of

investment in new robotic technology. New objectives may
New objective include cost minimisation in other areas of the business, such as
reducing staff levels. Other objectives may focus on increasing
factory output, as a result of the introduction of new technology.
Changes in business performance

2014 saw Tesco reporting its

worst ever financial results –
a loss of £6.4 bn.

Tesco needed a new strategy

to turnaround the business.

Dave Lewis became Tesco’s

new chief executive that year.
He introduced new objectives
to revive Tesco’s profitability.

At this point, Tesco’s objective

was survival.
Watch the clip and identify what went
wrong for Tesco
Teachers please note this is an alternative
video to the previous
Be the Business Advisor
Dave Lewis needs your
help!
In 2014, Tesco faced falling
levels of profitability, share
price and market share.
On a mini whiteboard, note
down two key objectives
Tesco should focus upon in
order to turnaround its
business performance.
 2014 Business objectives

Increase Cut
Suggest 3 ways Tesco could
revenue costs
minimise its costs.
Make sure you apply your
suggestions to Tesco’s situation
Improve profitability
 Some ideas…

Close poor performing stores

Reduce staffing levels

Exit global markets where it is not performing well.

Reduce debt through the sale of assets, such as its
South Korean business.
Reduce investment in new markets, such as digital
video on demand, coffee shops and restaurants and
focus on the core supermarket business.
How is Tesco doing now?

In light of the Sainsbury and Asda merger, discuss how

Tesco’s objectives may need to now change!
 Changes in legislation
New legislation introduced, such as changing the minimum wage, the
introduction of the national living wage, the launch of the sugar tax or shops
charging 5p for carrier bags, can affect business objectives
Possible impact ‐ the new laws could affect sales and therefore revenue,
employment levels or production methods, as well as possibly increasing
costs
Leading to a possible change in objectives – e.g. profit targets reduced
because of the increased costs caused by the new legislation
 Internal factors
Internal factors, such as management capability, new
leadership, availability of employees or the financial
position, could all change objectives
For example (1) : if there are less employees
available, then costs might increase to retain staff or
to pay for overtime which will affect profit levels.
For example (2): If management cannot cope with
the expansion aimed for due to a lack of expertise of
staff, then the business might stop trying to grow
and decide not to enter new markets.
Question: Explain how a change in leadership might
affect the business objectives of a business such as Tesco
Using Tesco as an example, let’s take a look at how its
business objectives have changed

Tesco exited
global markets
Survival Entering
where storesor
Focus on
2014, Tesco made Exiting
were
survival
a loss of £6.4 bn. underperforming;
Markets
sells South Korea
stores for £4bn
Dave Lewis
Reducing the becomes Tesco’s
workforce;
Growingsince or new CEO in 2014.
2014, Dave Lewis NewInternal
leadership
reducing
has ordered the
more
Undoubtedly, there will be led to many
reasons
workforce
than 10,000 job changes in Tesco’s
more changescuts
to across
comethewith business
the Sainsbury andbusiness
Asda merger objectives
The growth of Lily’s Kitchen
Read the article on the growth
of Lily’s Kitchen pet foods.

1. Explain how the objectives

of Lily’s kitchen may have
changed from its start up to
its current position. Use
examples to illustrate your
point.

2. Identify any factors that may

have caused a change in its
objectives.