Th3.2: Sales Maximisation Flashcards

1
Q

What does Robin Marris suggest?

A

that managers aim to maximise the growth of their company above any other objective because their salary may be linked to the size of the company

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2
Q

It is often easier for people to judge the…

A

level of growth achieved rather than the level of profit - this will increase the prestige of the business

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3
Q

Why is size often linked to security?

A

it is believed large firms can survive rough periods much easier and are less likely to get into financial trouble overnight

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4
Q

Growth will also increase…

A

market share and may push other firms out of business - will enable a firm to have more market power and power over prices

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5
Q

What are long term firms are more likely to…

A

profit maximise

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6
Q

What kind of strategy is this?

A

a short term strategy

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7
Q

What will the firm want to do in order to sales maximise?

A

get the highest level of sales possible without making a loss

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8
Q

Why will they aim for normal profits?

A

they want to ensure sufficient returns to keep the owners happy

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9
Q

Refer to PP

Look at Graph 26. As a result, they would produce at…

A

AC = AR

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10
Q

How do prices and output differ to how they would be under profit maximisation?

A

prices are lower and output is higher than they would be under profit maximisation

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11
Q

What is the problem with both sales maximisation and revenue maximisation?

A

it necessitates a fall in price, which other firms may copy and so there may be no or little increase in revenue or sales - important in oligopoly. also bring lower profits

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