Business objectives

Survival and profit

• Survival: the main objective for new businesses and for firms in a recession or facing new competition. It means generating enough cash to pay bills and keep trading. Many start-ups fail in their first years.
• Profit maximisation: making the greatest possible profit (revenue minus costs). Rewards owners and shareholders, funds investment. Hard to know exactly where maximum profit lies, and chasing short-term profit may harm long-term reputation.

Other objectives

• Sales maximisation: maximising sales revenue or volume, perhaps because managers' bonuses are linked to sales, or to gain economies of scale.
• Market share: increasing the percentage of the market held, which brings status, bargaining power with suppliers and possible economies of scale.
• Cost efficiency: minimising costs per unit (lean production, cutting waste) to compete on price or raise margins.
• Employee welfare: looking after staff well-being (pay, conditions, health, development). The January 2022 WBS11 paper asked about the benefits to a supermarket of having employee welfare as a main objective: better retention, lower recruitment and training costs and more motivated staff.
• Customer satisfaction: meeting or exceeding customer expectations, building loyalty and recommendations. The June 2024 paper asked candidates to define it (2 marks).
• Social objectives: aims that benefit society or the environment (cutting carbon emissions, supporting local communities).

Why objectives differ and change

Objectives depend on: the size and age of the business (start-ups aim to survive; established firms may chase growth or market share); ownership (shareholders may want profit; a social enterprise wants social aims); the economic environment (survival in a recession); competition; and stakeholder pressure (customers and staff demanding ethical behaviour). Objectives may conflict: employee welfare and cost efficiency can pull in opposite directions.

Worked example

A new restaurant opens in a city during a recession. Explain why survival is likely to be its main objective, and how its objectives might change after three years.

1. New firm: few loyal customers, limited cash, high start-up costs.
2. Recession: lower spending on meals out.
3. So survival (enough cash to pay bills) comes first.
4. After three years, if established, it may aim for profit, growth (a second branch) or customer satisfaction.

Answer: Survival first because of limited cash and weak demand; later profit and growth.

Check yourself

1. Which objective is most likely for a business in its first year of trading?
   • Maximising global market share
   • Diversifying into new countries
   • Survival
   • Paying the highest dividends in its industry
   Show answer

   Survival. New firms must first keep trading.

2. A firm introduces lean production to cut waste and reduce unit costs. Which objective does this support?
   • Cost efficiency
   • Employee welfare
   • Social objectives
   • Sales maximisation
   Show answer

   Cost efficiency. Lower unit costs.

3. Explain one benefit to a business of having employee welfare as a main objective.
   Show answer

   Staff who feel well treated are more motivated and less likely to leave, so labour turnover falls and the firm saves on recruitment and training costs.. Retention, productivity and lower recruitment costs.

4. Define customer satisfaction.
   Show answer

   The extent to which a business's products or services meet or exceed customers' expectations.. Meeting or exceeding expectations.

5. Why might a business aim to increase market share?
   • It always reduces revenue
   • It guarantees the highest profit
   • It removes the need for marketing
   • It brings bargaining power with suppliers and possible economies of scale
   Show answer

   It brings bargaining power with suppliers and possible economies of scale. Size brings power and lower unit costs.

6. Which pair of objectives is most likely to conflict?
   • Survival and cash flow
   • Cost efficiency and employee welfare
   • Customer satisfaction and customer loyalty
   • Market share and sales growth
   Show answer

   Cost efficiency and employee welfare. Higher pay and better conditions raise costs.

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Sources

• Pearson Edexcel International Advanced Subsidiary/Advanced Level in Business specification (2018)
• Pearson WBS11/01 mark scheme, January 2022
• Pearson WBS11/01 mark scheme, June 2024

Last updated 8 November 2026. Spotted a mistake? Tell us.