15 Business objectives

Question 1

Profit maximisation

Answer 1

when a business aims to have the most difference between the total costs and total revenue leading to highest profit

Question 2

sales revenue maximisation

Answer 2

when a business aims to sell at a price that allows it to make the most revenue through sales

Question 3

sales volume maximisation

Answer 3

when a business aims to sell as man units a possible

Question 4

growth maximisation

Answer 4

when a business aims to increase its size as much as possible. gain economies of scale in order to maximise future profits

Question 5

utility maximisation

Answer 5

when a business aims to increase their own happiness as much as possible - maximum satisficing

Question 6

Profit satisficing

Answer 6

when a business sets a level of profit taht it believes will be enough to keep owners satisfied

Question 7

Social welfare

Answer 7

when a business aims to make society better through its actions

Question 8

Corporate social responsibility

Answer 8

when a business aims to make a profit do good for society and improve the environment

Question 9

principal agent problem

Answer 9

potential disagreement over the objectives of the managers (principals) and those of the owners (agents)

Question 10

Evaluation of objectives

Answer 10

• stage business is at - new business is less likely than an established business to set profit max as objective
• owner wishes - businesses deliberately set up as non-profit organisation - charity
• timescale - profit ax a s long-term objective but in the short run they may focus on other objectives in the short run
• state of macroeconomy - respond to macroeconomic conditions (recession) by setting objectives that suit those conditions