Evolution of Business Objectives

Market conditions include demand, competition and customers’ sensitivity to prices. Rising demand may encourage a business to pursue growth because there are more potential sales available. Falling demand or stronger competition may instead lead it to prioritise survival or improving profitability. An objective to open more outlets might be replaced by one to reduce costs and keep existing outlets trading.

Customers’ willingness to pay also matters. If customers become more price-sensitive, a business may find it harder to achieve its sales targets at its existing prices. It must reconsider whether to compete more strongly on price, reduce costs or concentrate on a different group of customers.

Technology can create opportunities as well as competitive pressure. Online selling allows a retailer to reach customers beyond the area served by its shops. This may encourage objectives focused on reaching new markets or increasing sales. However, a business may also need to change direction because competitors are using technology to offer a cheaper or more convenient service.

Amazon began as an online bookstore and later expanded into categories including electronics, clothing and groceries. This illustrates how technology can support a much broader product range and customer base. Taking advantage of such opportunities still requires spending on systems, stock and distribution.

Performance, legislation and internal reasons change priorities

Performance means how well the business is doing. Managers can compare actual sales and financial results with their targets. If sales are disappointing or a market is making losses, continuing with the same growth objectives may worsen the problem. The business might instead focus on improving profitability, withdrawing weak products or leaving an unsuccessful market. Strong performance can make further expansion more realistic.

Legislation can change what a business is allowed or required to do. New regulations may require changes to its products or operations, increasing costs and leaving less money available for expansion. Objectives may therefore need to shift towards meeting legal requirements or protecting profitability. Changes in legislation can also create opportunities that encourage a new direction.

Internal reasons arise within the business. A new owner or management team may have different priorities. Company culture—the shared attitudes and ways of working within a business—can also influence whether managers favour expansion, innovation or tighter cost control. Limited money and management time may lead a business to concentrate on fewer activities rather than pursue every opportunity.

For example, when Satya Nadella became Microsoft’s chief executive in 2014, he increased the company’s emphasis on cloud services. This shows how a change in leadership can redirect business priorities; it does not mean that Microsoft stopped producing software.

These reasons can overlap. A new management team might respond to poor performance by changing objectives, while technological developments make its new direction possible.

Moving between survival and growth

A young business may initially focus on survival: covering costs, maintaining enough cash to pay bills and building regular custom. Expansion could put this at risk if it uses money needed for wages, rent or supplies.

Once sales become more reliable, the business may shift towards growth. Money previously kept as a cash cushion might be used for additional stock, another outlet or more employees. Success is then judged increasingly through measures such as sales and the number of outlets, rather than simply whether the business can pay its next bills.

This is not an automatic, one-way progression. An established business facing a downturn can move back towards survival. It may postpone expansion and reduce spending to protect its ability to continue trading.

Entering or exiting markets

Entering a new market means starting to serve a new group of customers or a new geographical area. It can support growth when opportunities in the existing market are limited. For example, a business may seek customers elsewhere once its original market offers little room for further sales growth.

Before entering, managers must consider likely demand, competition and the cost of serving those customers. Spending on promotion, distribution or product adaptation may be necessary before sufficient sales arrive. The opportunity for growth must therefore be weighed against the risk of losses.

Exiting a market means withdrawing from it. A business may leave because sales are too low, competition is too strong or costs have risen. Leaving can stop continuing losses and release money and management time for stronger markets.

However, withdrawal may involve costs: stock or specialised equipment may lose value, and the business gives up its customers there. Exiting one market can still support an overall growth objective if resources are redirected towards a better opportunity.

Changing the workforce and product range

A growth objective may require a larger workforce to produce more goods, serve additional customers or manage new outlets. Recruitment supports expansion, but increases wage costs. Managers need to judge whether expected sales justify those additional costs.

A business seeking to cut costs may reduce its workforce, merge roles or leave vacancies unfilled. This can lower spending, but having fewer employees may reduce the capacity to produce goods or serve customers. Workforce decisions therefore affect operations as well as finances.

Increasing the product range can attract new customers and help a business remain competitive. It can also replace sales lost as older products become less popular. However, additional products require resources for development, stock and promotion.

Decreasing the range allows the business to concentrate on stronger products and stop supporting unprofitable lines. It can simplify deliveries and release cash tied up in slow-selling stock, although some customers may leave if their preferred products disappear.

Consider a retailer whose sales are falling while competition increases. It might switch from opening new branches to protecting survival, withdraw its weakest product lines and reduce staffing costs. Marketing, operations, finance and human resources must work together: cutting the range changes stock requirements, while reducing staff affects the service customers receive. A change in objectives therefore shapes decisions across the whole business.

• Market conditions: changes in demand, competition or price sensitivity alter sales opportunities.
• Technology: creates new ways to sell and operate, but can increase competitive pressure.
• Performance: weak results may prompt cost reduction or withdrawal; strong results may support expansion.
• Legislation: new legal requirements or opportunities can change costs and priorities.
• Internal reasons: new leadership, company culture or limited resources can redirect the business.

How objectives change

• Survival ↔ growth: steady sales may enable expansion; a downturn may reverse the priority.
• Enter markets: reach new customers, balanced against competition and entry costs.
• Exit markets: stop losses or concentrate resources elsewhere, but lose customers and face withdrawal costs.
• Grow the workforce: support expansion, but increase wage costs.
• Reduce the workforce: cut costs, but potentially reduce capacity and service.
• Increase the product range: attract customers, but require more resources.
• Decrease the product range: focus on stronger products, but risk losing customers.

Connecting decisions

Reason for change → changed objective → action → consequence.

Objectives influence marketing, operations, finance and human resources together. Growth is not always the best priority, and withdrawal from one activity can support growth elsewhere.