Choose and explain business objectives
Explain survival, growth, profit and market-share objectives and why a business may prioritise different aims over time.
Cambridge IGCSE Business 0264, 2027–2029 syllabus, Topic 1. Apply concepts to the stated business and weigh benefits against costs and stakeholder effects. Written practice is self-checked and does not certify exam readiness
Before you begin
- No previous business study is assumed. Read each scenario for the decision-maker, objective, available evidence and constraints.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
Which is a possible business objective?
What you will learn
- Identify common business objectives
- Explain why objectives matter
- Show how objectives can change with context
Objectives guide choices
Common objectives include survival, growth, profit and market share. A business may have several objectives and may rank them differently.
Objectives help owners and managers choose between alternatives and assess performance. A target should be meaningful for the business and the period being considered.
Context can change priorities
A new business may prioritise survival and cash generation before pursuing growth. An established firm may aim to protect market share or expand profitably.
Objectives can conflict. Rapid growth may require finance and reduce short-term profit; a price cut may increase market share but lower profit per unit. Explain the trade-off rather than assuming one objective always dominates.
Pause and explain
Why might a new business prioritise survival?
Worked example
A new shop offers a temporary discount to attract customers despite lower profit per sale. Which objective may be prioritised, and what must be monitored?
Show the worked solution
- The discount may aim to build the customer base or market share.
- Lower price may reduce contribution per sale.
- Check whether additional sales and repeat purchases justify it.
Answer The shop may prioritise gaining market share or establishing itself. It should monitor sales volume, contribution, cash flow and whether customers return after the discount.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A business aims to increase market share by lowering prices. Explain one possible benefit and one objective conflict.
Give me a hint
Use customer response and contribution.
Compare my reasoning
- Lower prices may attract customers.
- More sales may increase market share.
- Lower revenue per unit may conflict with profit.
The price cut could attract buyers and increase market share if demand responds, but lower contribution per unit may conflict with the profit objective.
Look for these in your work
- Benefit mechanism
- Objective identified
- Conflict stated
A business moves from survival to growth after stabilising cash flow. Explain why changing objectives can be rational.
Give me a hint
Relate the new objective to changed resources and risk.
Compare my reasoning
- Survival may have been the immediate priority.
- More reliable cash flow may support investment.
- Growth still depends on demand and capacity.
Once the business is more financially stable, it may have resources to pursue growth. This is rational if demand and capacity support expansion; survival remains relevant if conditions worsen.
Look for these in your work
- Earlier objective explained
- Changed conditions linked
- Growth condition stated
A manager reports sales growth but falling profit. Explain why the result may not meet the business's objectives and name one figure to examine.
Give me a hint
Separate sales from profit and identify possible cost changes.
Compare my reasoning
- Revenue can rise while costs rise faster.
- Profit depends on revenue and costs.
- Examine contribution, unit costs or total costs alongside sales.
Sales growth may support growth or market-share aims but fail a profit objective if costs increase faster. Examine total costs, unit contribution or profit margin with the sales data.
Look for these in your work
- Objectives distinguished
- Cost mechanism explained
- Useful measure named
Common mistakes
- Assuming all businesses maximise profit at every moment
- Confusing market share with total market size
- Treating growth as automatically profitable
What can you explain now?
Which is a possible business objective?
Compare with the explanation
Survival
A business may aim to continue operating, especially when new or under pressure.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
Why may a business change its main objective after its first year?
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.