Two objectives conflict when pushing harder for one makes the other harder to reach. To explain it, state the two objectives, show the mechanism that links them, and use a number or fact from the case.
This lesson builds on identifying a stakeholder’s specific interest. Here the pull is between objectives, and each objective usually matters most to a different stakeholder.
Why do objectives conflict?
Resources are limited. A business that spends on lower prices has less to keep as profit. A business that pays higher wages has higher costs to cover.
Because the same money cannot be used twice, one objective can be bought at the cost of another.
Not every pair conflicts. Good service and customer loyalty often support each other. Your job is to show the trade-off only where the case contains one.
A method for explaining a conflict
- Name the two objectives exactly, such as “increase sales volume” and “increase profit”.
- State the action the business takes.
- Show the effect on objective A, then on objective B, using case data.
- Say why they pull apart: the same action helps one and harms the other.
- Add a condition if the conflict depends on something.
Worked example
Warung Laut Biru is a seafood restaurant in Kuantan. It sells a set meal at RM25. The variable cost of each set is RM15.
It sells 400 sets a month. The owner has two objectives: increase sales volume (market share) and increase profit. She considers cutting the price to RM22, and expects sales to rise by 30%.
Before the cut: contribution per set is 25 − 15 = RM10. Total contribution is 10 × 400 = RM4,000.
After the cut: contribution per set is 22 − 15 = RM7. Sales rise 30%, so 400 × 1.3 = 520 sets. Total contribution is 7 × 520 = RM3,640.
Compare: sales volume rises by 120 sets, but total contribution falls by 4,000 − 3,640 = RM360. Fixed costs are not in the case and are assumed to stay the same, so profit falls by the same RM360.
Written explanation: “Cutting the price to RM22 supports the objective of higher sales volume, as sets sold rise from 400 to 520. However, each set earns RM7 instead of RM10, so total contribution falls from RM4,000 to RM3,640. The objectives conflict because the lower price that wins customers also lowers the amount earned on each one. This holds if fixed costs stay the same and sales rise by only 30%.”
Extra check: to keep the RM4,000, she would need 4,000 ÷ 7 = 571.4, so at least 572 sets, which is a 43% rise. The conflict disappears only if the price cut is expected to bring in that many more customers.
The mistake to watch for
A common slip is to name a conflict without showing it.
Mistaken answer: “Profit and sales conflict because they are different objectives.”
Being different is not the same as being in conflict. The answer gives no mechanism and no case evidence.
The correction is to include the action, both effects and the reason they pull apart. Use the “because” test: if your sentence has no “because the same action…”, it is not yet an explanation.
Check yourself
1. Kedai Kopi Tuah in Melaka raises a cup of coffee from RM8 to RM9. Variable cost per cup is RM5. Sales fall from 1,000 to 900 cups. Does the price rise conflict with the objective of profit?
Show answer
Before: (8 − 5) × 1,000 = RM3,000. After: (9 − 5) × 900 = RM3,600. Contribution rises by RM600, so the higher price helps profit here. It may conflict with an objective of selling as many cups as possible, because volume falls by 100 cups.
2. A garment maker in Muar wants to pay all workers a higher wage and also keep the lowest price in town. Explain the conflict in two sentences.
Show answer
Higher wages raise the cost of making each garment. Keeping the lowest price limits how much of that cost can be passed on to customers, so the maker’s profit per garment is squeezed and one aim has to give.
3. Give a pair of objectives that would not necessarily conflict for a small bakery and say why.
Show answer
Offering good service and keeping customers loyal. Satisfied customers tend to come back and recommend the business, so spending effort on one supports the other. A conflict would only appear if the case showed service costs rising beyond what the prices cover.
Where this leads next
Once you can show a conflict, the next question is which objective the business should put first, which is the focus of using case evidence to prioritise a business objective. The contribution idea used above is covered in calculating contribution.
If you can explain the conflict aloud but lose the thread when writing it, our teachers can help in online one-to-one Business tuition.