Why do business objectives change over time

One of the main reasons for this is that market conditions change. If a business is in a growing market, over time its aims and objectives may change to focus on growth.

An example of this would be a company focused on sustainable products, such as biodegradable packaging, where demand is growing. If a business is in a market where there is suddenly an increase in competition, its aims and objectives may have to change to focus on survival, which is when a business aims to keep its day-to-day operations running.

Objectives give the business a clearly defined target. Plans can then be made to achieve these targets. This can motivate the employees. It also enables the business to measure the progress towards to its stated aims. S — Specific — objectives are aimed at what the business does, e. M - Measurable — the business can put a value to the objective, e.

R - Realistic — the objective should be challenging, but it should also be able to be achieved by the resources available. T- Time specific — they have a time limit of when the objective should be achieved, e. Survival — a short term objective, probably for small business just starting out, or when a new firm enters the market or at a time of crisis. Profit maximisation — try to make the most profit possible — most like to be the aim of the owners and shareholders. Profit satisficing — try to make enough profit to keep the owners comfortable — probably the aim of smaller businesses whose owners do not want to work longer hours.

Sales growth — where the business tries to make as many sales as possible. This may be because the managers believe that the survival of the business depends on being large. Large businesses can also benefit from economies of scale. Growth versus profit: for example, achieving higher sales in the short term e.

Short-term versus long-term: for example, a business may decide to accept lower cash flows in the short-term whilst it invests heavily in new products or plant and equipment.

Large investors in the Stock Exchange are often accused of looking too much at short-term objectives and company performance rather than investing in a business for the long-term. Ethical and socially responsible objectives — organisations like the Co-op or the Body Shop have objectives which are based on their beliefs on how one should treat the environment and people who are less fortunate.

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. Companies with little available finance may struggle to survive when not being able to pay bills on time, while businesses rich in cash might be trying to achieve fast business growth by expanding their activities. In the end, a huge sum of money is needed, if the company wants to grow its size.

Risk profile. Owners and managers who have higher risk tolerance will show willingness to take risks by setting ambitious objectives such as new process innovations, expansion abroad or development of new products. Serious critical events such as market downturns or economic depression will force businesses to change the objective from growth to trying to survive in the short-term.

Corporate culture. Businesses with flexible and adaptable organizational cultures may change objectives very often. In the contrary, organizations which are reluctant to change and prefer to maintain status quo will want to forever continue doing the same things in the same way. External factors lie outside the business and are often beyond any control of the management. State of the economy.