Theme 3: Business Objectives Flashcards
Who are the 5 influencers of the firm?
owners, shareholders, directors/managers, workers and consumers.
What are the shareholder’s objective
What are the directors/managers 2 objectives
They usually look to maximise sales or revenue.
What are the worker’s 3 objectives?
want higher wages, job security and improved working conditions.
What are the consumer’s 3 (or 4) objectives
want lower prices, better customer service and quality, and they also care about social and environmental causes (e.g. homeless people and polar bears).
Draw a costs and revenue diagram for a profit-maximising firm.
Draw a costs and revenue diagram for a sales-maximising firm.
Draw a costs and revenue diagram for a revenue-maximising firm.
What is revenue maximisation?
Where MR = 0
What is sales maximisation?
When a firm maximises its sales without making a loss, where AC = AR
What is profit maximizing?
Where MR = MC
What is profit satisficing?
Profit satisficing is when a company makes enough profit to satisfy its influencers, but then pursues other objectives (social, environmental, personal).
