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Business Objectives ยป Why Business Aims Change - Legislation and Internal Reasons

What you'll learn this session

Study time: 30 minutes

  • Understand why business aims and objectives change over time
  • Explore how legislation forces businesses to adapt their goals
  • Examine internal factors that drive changes in business objectives
  • Analyse real-world examples of businesses adapting to change
  • Evaluate the impact of different types of change on business success

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Introduction to Changing Business Objectives

Imagine you're planning a school trip, but then the weather changes, new safety rules come in, or half your friends can't come anymore. You'd have to change your plans, right? Businesses face similar challenges - they constantly need to adapt their aims and objectives when circumstances change.

Business objectives aren't set in stone. They're living, breathing targets that must evolve as the world around them changes. Understanding why and how these changes happen is crucial for business success.

Key Definitions:

  • Business Objectives: Specific, measurable targets that a business wants to achieve within a set timeframe.
  • Legislation: Laws and regulations created by government that businesses must follow.
  • Internal Factors: Changes that happen within the business itself, like new ownership or financial problems.
  • External Factors: Changes in the outside world that affect the business, like new laws or economic conditions.

Why Change Happens

Businesses don't change their objectives for fun - they're forced to adapt by pressures from inside and outside the company. Those that don't adapt often struggle or fail completely.

Legislative Changes: When Laws Force Business Adaptation

Governments regularly introduce new laws that businesses must follow. These legislative changes can completely reshape a company's priorities and force them to set new objectives.

Types of Legislative Changes

Different types of laws affect businesses in various ways, each requiring specific adaptations to business objectives.

Environmental Laws

New rules about pollution, waste and carbon emissions force businesses to set green objectives and invest in cleaner technology.

Health & Safety

Stricter workplace safety rules mean businesses must prioritise employee wellbeing and invest in safety equipment and training.

Employment Law

Changes to minimum wage, working hours, or employee rights affect staffing costs and workplace policies.

Case Study Focus: McDonald's and Plastic Straws

When the UK government announced plans to ban plastic straws in 2018, McDonald's had to completely change its objectives. The company shifted from focusing purely on cost-effective service to prioritising environmental sustainability. They invested millions in developing paper straws and changed their supply chain objectives to include environmental criteria. This legislative pressure forced a major strategic shift that affected everything from procurement to marketing.

How Legislation Drives Objective Changes

When new laws are introduced, businesses typically go through a predictable process of adapting their objectives.

The Adaptation Process

Understanding how businesses respond to legislative changes helps explain why their objectives shift over time.

Immediate Response

Businesses first focus on compliance - setting objectives to meet the minimum legal requirements. This often means diverting resources from growth to regulatory compliance.

Strategic Adaptation

Smart businesses then look for competitive advantages, setting objectives to exceed legal requirements and use compliance as a marketing tool.

Internal Reasons for Changing Objectives

Not all changes come from outside the business. Internal factors - things happening within the company itself - are equally important drivers of objective change.

Key Internal Factors

Several internal changes can force businesses to completely rethink their objectives and priorities.

Ownership Changes

New owners often bring different priorities. A family business sold to investors might shift from long-term stability to short-term profits.

Financial Performance

Poor performance forces survival objectives, while strong profits might enable expansion or diversification goals.

Technology Changes

New technology can create opportunities for efficiency or new products, requiring updated objectives to capitalise on these advances.

Case Study Focus: Blockbuster's Missed Opportunity

Blockbuster's internal resistance to change provides a perfect example of how internal factors affect objectives. When Netflix emerged, Blockbuster's management team (internal factor) refused to change their objectives from physical rental stores to online streaming. Their internal culture and leadership decisions prevented them from adapting their business objectives, ultimately leading to bankruptcy whilst Netflix thrived.

Financial Pressures and Objective Changes

Money talks in business and financial pressures are among the strongest internal forces driving objective changes.

Types of Financial Pressure

Different financial situations require different objective responses from businesses.

Financial Crisis

When cash flow problems hit, businesses must shift objectives from growth to survival. Cost-cutting, redundancies and selling assets become priorities over expansion or innovation.

Financial Success

Strong profits enable new objectives like expansion, research and development, or acquiring competitors. Success creates opportunities for ambitious new goals.

Management and Leadership Changes

New leaders often bring fresh perspectives and different priorities, leading to significant shifts in business objectives.

Leadership Impact on Objectives

The style and priorities of business leaders directly influence what objectives the company pursues.

New CEO Vision

A new chief executive might shift focus from short-term profits to long-term sustainability, or from domestic to international markets.

Generational Change

When younger family members take over family businesses, they often introduce modern objectives like digital transformation or social responsibility.

Board Pressure

Shareholders and board members can force management to change objectives, particularly if current performance is disappointing.

Case Study Focus: Apple's Transformation

When Steve Jobs returned to Apple in 1997, he completely changed the company's objectives. Previously focused on computers for creative professionals, Jobs shifted objectives toward consumer electronics and design excellence. This internal leadership change transformed Apple from a struggling computer company into the world's most valuable technology company, showing how powerful internal changes can be.

Technology and Innovation Pressures

Rapid technological change forces businesses to constantly update their objectives to stay competitive.

Technology-Driven Changes

Modern businesses must adapt their objectives to embrace new technologies or risk being left behind.

Digital Transformation

Traditional retailers now set objectives around online sales, mobile apps and social media marketing - areas that didn't exist 20 years ago.

Automation Opportunities

New machinery and software can reduce costs and improve quality, leading businesses to set objectives around efficiency and automation.

Balancing Multiple Pressures

In reality, businesses rarely face just one pressure at a time. Successful companies must balance multiple internal and external forces when setting new objectives.

The Balancing Act

Smart businesses develop objectives that address multiple pressures simultaneously, creating win-win solutions where possible.

Stakeholder Needs

Objectives must satisfy employees, customers, shareholders and regulators - often with conflicting demands.

Short vs Long-term

Balancing immediate survival needs with long-term growth objectives requires careful planning and prioritisation.

Resource Allocation

Limited resources mean businesses must choose which objectives to prioritise when multiple changes are needed.

Real-World Example: COVID-19 Impact

The COVID-19 pandemic perfectly illustrates how multiple pressures force objective changes. Restaurants faced new health legislation (external), cash flow problems (internal) and changing customer behaviour (external). Many shifted objectives from dine-in service to delivery and takeaway, invested in safety equipment and focused on survival rather than growth. Those that adapted quickly were more likely to survive.

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