Lecture notes
Business Objectives
- Institution
- CCEA
A look at the advantages and disadvantages of growth, survival and profit maximisation as business objectives.
[Show more]
1 review
By: montykaren • 3 year ago
Content preview
Business ObjectivesProfit Maximisation:
This objective can be taken to mean operating a business at that level of output
whereby a business yields the maximum available profit since total costs have been
minimised.
Very few businesses achieve profit maximisation (due to pressure from stakeholders,
industry regulators etc.) but instead aim for a satisfactory level of profit – called
satisficing.
Is a long-term goal.
Growth:
The most common objective and is mainly an objective of an existing business.
Can be measured in various ways, measurement of sales quantities, revenues, profit
levels or market share.
Achievement of growth of revenues or market share could secure the future prospects
of a business – enhance the competitive position or minimise the chance of business
failure.
Factors Determining Business Objectives:
Age: New firms = survival + established firms – more ambitious = growth + profit.
Size: Small - satisfactory level of profit or breakeven + a large firm – interested in
market share + growth.
Nature of Business: Public Sector vs. Private sector, profit vs. non-profit making.
Stakeholder power: If shareholders are dominant = profit. If they are ethical they may
put pressure on firm to make ethical decisions + goals that fit this. Pressure groups –
could influence the course of action.
State of the Economy: Recession = survival as growth is unrealistic. High interest rates
investment + growth too costly.
Market: If the market is saturated, a business may have to be content the in ST with
maintaining market share rather than growth.
Legislation: Government + planning regulation could prevent expansion.
Attitude to risk: Risk takers will gamble + diversify into new markets. Risk averse will not
take risks + will seek to have a satisfactory level of profit in existing markets. Culture of
the organisation will have an influence.
Conflict of Objectives:
Conflict can be defined as the contradiction of ideas or objectives.
Which generally means that one objective cannot be achieved, that it might be
achievable at the expensive of another related objective.
Conflict tends to arise when one or more business objectives are unclear.
It has been suggested that business objectives should be SMART.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller MarkC57. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £3.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
84866 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now