Business Objectives Flashcards
1
Q
What are the 4 business objectives?
A
- Profit maximisation
- Revenue maximisation
- Sales maximisation
- Satisficing
2
Q
Where is the profit maximising point?
A
MR = MC
3
Q
Why might it be difficult for firms to profit maximise? (3)
A
- They may not know where this level is
- Regular price changes are disruptive to customers
- Firms may be forced to change prices by the Competition Commission
4
Q
Why does revenue maximisation occur?
A
Sales managers receive commission on sales (principal-agent problem)
5
Q
Where is the revenue maximising point?
A
MR = 0
6
Q
Where is the sales maximising point?
A
AR = AC
7
Q
Why might firms use sales maximisation? (3)
A
- To clear stock during a sale
- To increase market share
- Satisy sales managers
8
Q
What is satisficing?
A
Where a firm balances profit and revenue to appease shareholders and sales managers
