Theme 3:3.2-Business Objectives

Question 1

pros of profit maximisation.

Answer 1

profits can be reinvested
dividends for shareholders
lower costs could lead to lower prices for consumers
reward for entrepreneurship

Question 2

cons of profit maximisation.

Answer 2

-could lead to extra scrutiny as competition authorities or regulators could investigate firm and take action
-needs knowledge of MC=MR
-could harm key stakeholders(such as consumers, workers)

Question 3

what is a stakeholder?

Answer 3

A stakeholder is a party that has an interest in a company and can either affect or be affected by the business.

Question 4

pros of revenue maximisation

Answer 4

-predatory pricing to drive out competition/ gain market share.
-economies of scale
-principal agent problem
-managers vs owners

Question 5

con of revenue maximisation.

Answer 5

business owners forgo making a profit to increase revenue-this is unsustainable in the long run

Question 6

pros of sales maximisation.

Answer 6

-flood the market to gain higher market share
-limit pricing-not as low as predatory to limit competition
-EoS

Question 7

con of sales maximisation.

Answer 7

-unsustainable in the long run

Question 8

what is the firm example for profit maximisation?

Answer 8

apple

Question 9

what is the firm example for revenue maximisation?

Answer 9

amazon

Question 10

what is the firm example for sales maximisation

Answer 10

netflix(previously)

Question 11

at which point of a graph does revenue maximisation occur?

Answer 11

where MR=0

Question 12

at which point of a graph does sales maximisation occur?

Answer 12

AC=AR

Question 13

define profit satisficing.

Answer 13

when profit is sacrificed in order to satisfy as many shareholders as possible