EDEXCEL GCSE BUSINESS · PAPER 2
Exam Practice: Changes in Aims and Objectives
Changes in business aims and objectives · Growing the business · Lesson 2 of 4 · 12 marks · 20 minutes
Name Date
Answer all questions. Use the context of the business in the question where one is given.
Question 1 STATE [1 mark]
State one reason why a business might change its objectives.
Question 2 OUTLINE [2 marks]
Outline one way a business might change its objectives if its sales fall sharply.
Question 3 EXPLAIN [3 marks]
Explain one reason why a business might change its objectives.
Question 4 ANALYSE [6 marks]
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SOURCE Coastline Travel PLC runs holidays to 30 countries. Last year its profit fell by 40% as rising costs and falling customer incomes hit demand. Its board has decided to stop selling holidays to eight countries and to reduce its staff by 10%. |
Analyse the reasons why Coastline Travel PLC has changed its objectives.
Answers
Check your answer only once you have written one.
Question 1 [1 mark]
Changes in market conditions.
▸ Any one of: market conditions; technology; performance; legislation; internal reasons 1 mark
Question 2 [2 marks]
It might change its focus from growth to survival (1), for example by closing loss-making branches to cut costs (1).
▸ A change identified, e.g. growth to survival / exit a market / reduce workforce / cut product range 1 mark
▸ Developed: what the business would do 1 mark
Question 3 [3 marks]
A change in technology (1). New technology may make the business's existing products obsolete, so sales fall (1). The business may therefore change its objective to developing new products that use the new technology, to protect its sales (1).
▸ A reason identified 1 mark
▸ First linked point of explanation 1 mark
▸ Second linked point of explanation 1 mark
Question 4 [6 marks]
Coastline's performance has worsened: profit fell by 40%, so its objective has shifted from growth towards survival and protecting profit. Stopping holidays to eight countries means exiting the least profitable markets, which cuts costs and lets it focus on its most popular destinations. Market conditions are also a reason. Rising costs and falling customer incomes mean fewer people can afford holidays, so demand has fallen. With fewer customers, Coastline needs fewer staff, which is why it is reducing its workforce by 10%. This lowers its wage costs so it can stay profitable until demand recovers.
▸ AO2 (Application, 3 marks): uses the context - 40% fall in profit, 30 countries, exiting eight, 10% staff cut Level 1-3
▸ AO3a (Analysis, 3 marks): chains of reasoning explaining why the objectives changed Level 1-3