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# Starter: Thinking outside the box - PowerPoint PPT Presentation

Starter: Thinking outside the box. Some months have 30 days, some have 31 days, how many have 28 days? 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

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Starter: Thinking outside the box

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### Starter: Thinking outside the box

• Some months have 30 days, some have 31 days, how many have 28 days?

• 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

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.

Growth can be organic or external

• 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.

### Quick questions

• Give two reasons why a business owner may want the business to get bigger?

• Give two benefits of the business getting bigger

• Give one benefit of being the biggest firm in the market?