3.2.1 Business objectives

Question 1

what is revenue maximisation?

Answer 1

where the firm aims to make as much revenue as possible

Question 2

possible reasons for revenue max

Answer 2

1. want to sell all of its stock which might go out of date/ off if not sold like perishable goods
2. it is ownded and managed by different people - divorce of ownership and control: owners of bus may want higher profs but ppl running acc bus may want to maiximise rev as their pay and bonusses may be based on this.
3. Focuses on increasing market share and capturing a larger customer base.
4. May be used when a company wants to establish its presence in the market quickly.
5. Can lead to higher long-term profits if accompanied by cost control.
6. Firms will also maximise revenue in order to increase output & benefit from economies of scale
   7 In the short-term firms may use this strategy to eliminate the competition as the price is lower than when focussing on profit maximisation

Question 3

where does rev max occur?

Answer 3

producing where mr = 0

Question 4

what is sales maximisation?

Answer 4

when the firm intends to sell as much as possible with the condition that it at least makes normal profit. (and wo making a loss)

Question 5

possible reasons for sales max

Answer 5

1. increase market share
2. and/or build brand loyalty

Question 6

where does sales max occur?

Answer 6

ar = ac