Why objectives change over time

Then, as a result, it will maximize profits from the higher level of sales and lower average unit costs by using economies of scale in the long-term.

There are many environmental factors that can cause business objective to change at any time. Due to competitive changes in economic environment caused by new powerful competitors entering into the market, business objectives might change from profit maximization to survival.

Internal factors come from within the business and are largely controllable by the management. They include:. Type and size of the business. Any change in legal structure of the business will cause objectives to change. In small unincorporated businesses where the sole traders and partners are both owners and managers, they tend to balance their paychecks with investing finance into the business. In larger incorporated companies where ownership is separated from managing the company, different stakeholders pursue different things.

Shareholders want to be paid as much profit as possible in the form of dividends while managers want to receive higher salaries that will result in less profit available for sharing.

Private sector vs. Private-sector businesses aim to maximize profits while public-sector organizations aim to provide quality services to the general public breaking even at the same time. Age of the business. New companies want to break even and survive while old companies want to grow and increase market share. Finance available. Once that objective is reached, the company would need to set new objectives to reflect increasing profits and growth.

External factors like economic recession can force a business venture to reconsider its objectives. For instance, a business venture would need to be downsized in order to cope with reduced output and profits, or would need to change its aim of achieving a certain amount of profit within a stipulate time. In certain cases, a company would changes its objective of growing to just surviving in the market.

A company would need to change its business objectives in order to maintain its position in the market. Changing its business aims would enable the company to respond to competition from other companies with similar goals. For instance, a company dealing with beauty products would have to change its business aims from mere profit making to increasing market share and being ethical and environmental friendly if it faces competition from another company dealing with similar beauty products.

The use of technology in certain business ventures would cause changes in the business objectives. For instance, a company that hires labors for its work would set its business aims in accordance with the productivity of the workers that it employs.

Using automated technology for the same work would increase productivity and sales to a great extent. And this would require the concerned company to set new aims that would reflect the current proceedings. Positive changes Opportunities , of external factors should lead the business to review its corporate objectives and strategy and adjust its plans for the future refer to SWOT analysis later.

Table of Contents Topic pack - introduction 1. AO3 You need to be able to: Demonstrate synthesis and evaluation. Command terms these terms require students to rearrange component ideas into a new whole and make judgments based on evidence or a set of criteria. Compare Compare and contrast, Contrast, Discuss, Evaluate, Examine, Justify, Recommend, To what extent Changing objectives in response to changes in the external and internal environment NB You will deepen your understanding of these concepts when studying PEST and SWOT analyses Aims and objectives are not fixed, but will change from time to time in response to changes in the internal and external environments, which offer opportunities or pose threats.

Internal environment: Internal means inside the business and can be controlled by the business. Positive internal changes may include: The recruitment of talented and experienced individuals Improving productivity and quality Successful innovation Exceeding performance measures Positive changes Strengths to the internal environment also should be addressed.