Starter: Thinking outside the
box
1. Some months have 30 days, some have
31 days, how many have 28 days?
2. Divide 30 by half, then add 10
what do you get?
3. A farmer has 17 sheep
and all but 9 die.
How many are left?
Changing business aims and
objectives
GCSE Business studies
Unit 2
Topic 6
Learning objectives
£
I can explain the difference between an
aim and objective.
££ I am able to analyse why a firms aims
and objectives change as they grow.
£££ I can evaluate how a firm might gain
more market share through innovation
and diversification.
As a business grows, the
aims and objectives of its
owners and managers may
change. In this section we
look at what these objectives
might be for a growing
business.
By the end of this section you should know:
the reason for changing aims and
objectives as businesses grow; about
ethical and environmental considerations.
Remind me, what is an aim
and what is an objective?
As you get older, your aims and objectives will
almost certainly change. Either you will have
achieved some of your objectives and will now
set new ones, or you will realise that some of
your original aims were not realistic.
For example my objective of achieving
the best grade I could in my GCSE
Business exam is now redundant as I
have already taken it, I got an A* by the
way. Where as my aim of marrying
Megan Fox, I now appreciate is a little
unrealistic, I have changed my aim to just
meeting her!!!
Why do aims and objectives
change?
The aims and objectives
of a business will
change over time. In
particular, as they get
bigger they are likely to
have different objectives
that when they first
started out.
Why do aims and objectives
change?
In the beginning, an entrepreneurs first
thoughts are generally about getting the
business up and running and making sure
it survives the first few months.
Once this has been achieved, the owner
may think more about other objectives
Task – Fizz & burp drinks co.
Working in 2/3s,
read the case study
and complete the
activity in your
exercise books
You have 7 minutes!!!
Growth, innovation &
diversification
Growth
Once a business is
established, the owners of
some firms will want their
business to get bigger. They
may want to be the biggest
airline in the Uk or the biggest
seller of crisps, for example.
To achieve this they may have
to spend money on new
equipment or premises.
Bigger firms are more
powerful in the markets, which
means a larger firm can often
get cheaper materials
because it is such an
important customer
Bigger companies are also more
well known; this can help when
they want to launch new
products as shops will be more
willing to stock their products
and customers more willing to
try them.
By getting bigger, firms may be
safer from hostile takeovers
because they will be worth a lot
more and be more expensive to
buy. Some investors will also be
keen to grow because this
provides a sense of
achievement. For example, look
at what Bill Gates has achieved
with Microsoft since he founded
the business in 1975!
As part of a growth objective, a
business may set itself the target of
becoming the dominant firm in the
industry – i.e. having the highest
market share
But why is it so important
for a business to be
market leader?
Being market leader brings
benefits as the business may then
have the greatest power over
suppliers, distributors and other
firms in the industry. The
dominant firm may be able to set
a price that other will follow
because they do not want to start
a war with the biggest business in
the market.
• Organic growth:
occurs when firms get
bigger by selling more
of their products
• External growth:
occurs when a
business joins with or
buys another
business. This leads to
faster and more
sudden increases in
size.
Growth can be
organic or external
Quick questions
Write down the questions and answers in
your books.
1. Give two reasons why a business owner
may want the business to get bigger?
2. Give two benefits of the business getting
bigger
3. Give one benefit of being the biggest firm
in the market?
Extension task
• Working in 2/3s, use the internet to
research the following:
• From a business studies point of view,
what are the meaning of the following:
innovation & diversification
– Describe each
– Name a company as an example for each,
give reasons