Business Objectives (Edexcel A Level Business): Revision Note
Exam code: 9BS0
Survival and profit maximisation
Businesses can have a range of objectives when they start up
These objectives may change over time
The aim of most start-up businesses is to survive the initial entry into the market and to generate enough cash flow to remain in business
Effective cash flow management is more important than gaining an income or seeking profit maximisation
Once that has been achieved, the business objective usually switches to profit maximisation
Profits benefit shareholders as they receive dividends and increase the underlying share price
An increase in the underlying share price increases the wealth of the shareholder
Other business objectives
Business objectives may change over time
The core objective usually remains profit maximisation, but the business may choose to also focus on a range of other objectives
E.g. If a business focuses on employee welfare, it will increase its costs but raise the morale and productivity of its workers
The increased costs will reduce the level of profit in the short term
However, it may lower costs in the long term, as the business can retain employees, which lowers recruitment and training costs
Common business objectives
Objective | Explanation |
|---|---|
Sales maximisation |
|
Market share |
|
Cost efficiency |
|
Employee welfare |
|
Customer satisfaction |
|
Social objectives |
|
Case Study
Grain
When siblings Tom and Ellie Whitfield opened their first Grain bakery-café, their only objective was survival, keeping enough cash flowing in to cover rent and wages during a difficult first year
Once Grain became established, the siblings shifted their focus to profit maximisation, raising prices slightly and introducing a small range of higher-margin specialty coffees
As profits grew, they opened two further branches, pursuing sales maximisation and a larger share of the local café market rather than squeezing out maximum profit from a single site
To support this expansion, Grain renegotiated contracts with flour and coffee suppliers to improve cost efficiency, allowing prices to stay competitive across all three branches
The siblings also introduced guaranteed minimum hours and paid breaks for staff, improving employee welfare after high staff turnover threatened service quality and customer satisfaction
Grain now donates unsold bread to a local food bank each evening, reflecting a social objective that has become part of the brand's identity as it has grown
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