**2015 ECONOMICSB** 1.1.1 Business Objectives
Theme 1 Markets, Consumers and Firms
- Created by: RosyKid
- Created on: 25-03-16 23:42
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- BUSINESS OBJECTIVES 1.1.2
- Profit Maximisation
- A firm profit maximises when they are operating at the price and output which gains the greatest proft
- Firms aim to maximise profits
- Profit = Total Revenue - Total Costs
- profit is the reward an entrepreneur yield when they take risks
- Profit = Total Revenue - Total Costs
- "Profit is the financial return or reward that entrepreneurs aim to achieve to reflect the risk that they take"
- Some firms may decide to profit maximise in the long term, since consumer don't like rapid price changes
- Private Limited Companies (PLC's) are keen to profit maximise because if they don't reach financial targets they could lose shareholders
- So, they are more likely to have short run profit maximisation because they need to continuously keep shareholders happy
- Private Limited Companies (PLC's) are keen to profit maximise because if they don't reach financial targets they could lose shareholders
- Sales Maximisation
- When the firms aims to sell as much as possible without making a loss
- Not- for-profit organisation, such as charities, may aim to work at this level
- Popular in competitive markets also
- because some firms want to achieve rapid market growth
- Satisficing
- When a firm does not seek maximum profit or sales but achieves a good enough level of profit that ensures survival without stress or worry
- and enough profit to keep shareholders happy
- When a firm does not seek maximum profit or sales but achieves a good enough level of profit that ensures survival without stress or worry
- OTHER Objectives
- Survival
- Short Term objective:
- Most likely for a small business or a new business entering the market
- Or for the firms in the market at a time of crisis e.g. recession
- Short Term objective:
- Cost Efficiency
- Can be a firms main objective
- Essential for firms in competitive markets, cost efficiency ensures they aren't competed out of the market
- The more efficient a firm is, the lower the average costs
- Gives firms a competitive advantage
- because they can afford to charge lower prices and therefore, compete against rivals
- Gives firms a competitive advantage
- Employee Welfare
- Ensures making sure pay and conditions are good
- Employee Loyalty
- Therefore, Employees are less likely to leave
- Happier employees = more motivated employees = increased production and quality
- Social Objetives
- relates to Corporate Social Responsibility (CSR)
- Important when the business aims to create benefits for the society and local area by pursuing social, environmental or ethical goals
- Survival
- Profit Maximisation
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