Business objectives

Question 1

Business objectives

Answer 1

Profit maximisation
Revenue maximisation
Sales maximisation

Question 2

Reasons for different business objectives

Answer 2

Managerial objectives
Information gaps
Start up/ small businesses
State owned corporation

Question 3

Reasons for different business objectives-Mangrial objectives

Answer 3

-desire high revenue/sales
-provide satisfactory profit to share holders

Question 4

Reasons for different business objectives-Information gaps

Answer 4

-lack of info on costs/ revenues in the market
-cost plus pricing (cost plans 10% profit)

Question 5

Reasons for different business objectives-Start-up/ small business aims

Answer 5

-May be a lifestyle business
-Rapid growth to survive

Question 6

Reasons for different business objectives-State owned corporation

Answer 6

-likely to have a range of political and economic aims

Question 7

Maximises

Answer 7

-These businesses follow traditional economic theory. They make the best choices from the best available profits
-aim to maximise their profits

Question 8

Satisfactory

Answer 8

-Aware of limited information, lack time or resources
-Choose the best from in limited range of options
-Work out costs, add a little percentage for a profit

Question 9

Profit seeking

Answer 9

-ALL firms are profit seeking to an extent however may not want maximised profit

Question 10

Profit maximisation

Answer 10

This is the short run or long run process by which a firm may determine the price, input and output levels that will lead to the highest possible total profit
- where MR=MC

-e.g the airline industry as its known for dynamic pricing which is a prime example of profit maximisation and price elasticity as they alternate their prices seasonally to max their profits based on demand

Question 11

Revenue maximisation

Answer 11

When a company aims to increase its sales and revenue without necessarily focusing on profitability
- where MR=0
-An example of this is uber as they focus o increasing their consumer base by offering competitively low prices for riders and drivers to dominate the ride-sharing market

Question 12

Sales maximisation

Answer 12

Also known as growth maximisation involves supplying the largest output possible consistent with earning at least normal profits
- where AR=AC

-Examples include Netflix and Spotify as the managers aim to grow over any other objective which therefore results in a higher market share which increases dominance

Question 13

Sales max diagram

Question 14

Revenue max diagram

Question 15

Profit max diagram