Corporate Social Responsibility (CSR) is the idea that businesses should act in a way that benefits not just shareholders, but wider society — including employees, the environment and local communities.
Examples of CSR activity
Reducing carbon footprint / net zero targets
Paying a living wage above minimum
Ethical sourcing of materials (Fairtrade)
Community investment and volunteering
Diverse and inclusive hiring practices
Business benefits of CSR
Enhanced brand reputation and customer loyalty
Attracts ethical investors (ESG funds)
Staff pride and lower staff turnover
Avoids costly regulation or fines
Competitive advantage in ethical markets
Business Lifecycle
How Objectives Change Over Time
Start-up stage: Survival is the priority — the business is building its customer base and covering costs. Cash flow is often negative.
Growth stage: Focus shifts to increasing market share and sales. May accept lower profit now for bigger rewards later (e.g. Amazon's early years).
Maturity stage: Profit maximisation becomes the key goal. Brand is established; costs are optimised. Shareholders expect dividends.
Decline / recession: Survival re-emerges. Businesses cut costs, diversify or pivot to stay viable (e.g. many high street retailers during COVID).
Stakeholder Conflicts
Conflicts Between Objectives
Profit vs CSR
Investing in ethical sourcing or paying living wages increases costs, reducing short-term profit. Shareholders may object — but long-term reputation improves.
Growth vs employee welfare
Rapid expansion may require staff to work longer hours or accept redundancies as the business automates. Employee wellbeing vs shareholder returns.
Survival vs investment
A business trying to survive may cut R&D or training budgets — short-term fix that weakens long-term competitiveness.
Market share vs profit
Gaining market share may require price cuts that reduce profit margins. Amazon famously prioritised growth over profit for years.
Key Performance Indicators
Measuring Success — KPIs
What are KPIs?
Key Performance Indicators are quantifiable measures used to evaluate whether a business is achieving its objectives.
Revenue / profit figures — is the business making money?
Market share percentage — e.g. "we now hold 12% of the UK coffee market"
Customer satisfaction scores — Net Promoter Score (NPS), reviews
Employee turnover rate — high staff leaving = poor welfare/morale
Common exam question type: "Analyse why a business might change its objectives." — worth 6 marks.
State the change: e.g. "The business shifts from survival to profit maximisation" — always link to the scenario given
Explain why: "As the business becomes established and builds a loyal customer base, it can now focus on increasing profit margins"
Consequences: "This may lead to higher prices or cost-cutting, which could affect customer satisfaction"
Evaluate: "However, if the market is very competitive, prioritising profit over market share could result in losing customers to rivals"
Practice Question 1 of 3
A new bakery business has just opened. Which objective is most likely to be its top priority in the first year of trading?
AProfit maximisation — generating the highest possible profit per product
BSurvival — covering costs and establishing a customer base
CMarket dominance — becoming the leading bakery in the country
DShareholder returns — paying large dividends to investors
Correct: B. New businesses typically prioritise survival. In the early stage, cash flow is often negative and the business is still building its customer base. Profit maximisation and shareholder returns come later once the business is established and generating consistent revenue.
Practice Question 2 of 3
Which of the following is the best example of a SMART objective?
A"We want to grow the business and be more successful"
B"Increase monthly website visitors by 20% within 6 months through targeted social media advertising"
C"Improve customer service as soon as possible"
D"Try to sell more products next year"
Correct: B. Option B is SMART: Specific (website visitors), Measurable (20%), Achievable (realistic target), Relevant (linked to growth), and Time-bound (within 6 months). The other options are vague, lack measurable targets, or have no deadlines.
Practice Question 3 of 3
A profitable clothing brand decides to source all materials from Fairtrade suppliers, increasing costs by 12%. Which statement best describes this decision?
AIt prioritises profit maximisation over all other objectives
BIt is an example of a CSR objective conflicting with short-term profitability
CIt will definitely lead to the business going out of business
DIt shows the business has no financial objectives
Correct: B. This is a classic example of a CSR objective conflicting with profitability. The ethical sourcing costs more (reducing short-term profit) but may enhance the brand's reputation, attract ethical consumers, and improve long-term performance. Businesses often accept short-term profit falls for long-term strategic gain.