Objectives Of Firms Flashcards
1
Q
How is survival an objective a firm may have?
A
- many new businesses don’t survive the first year
- in terms of recession, firms may struggle to breakeven
—> surviving critical periods such as these might be a firms key objective
2
Q
How is growth another objective of a firm?
A
- firms may wish to increase the scale of their operation in order to achieve lower average costs
- growth may also reflect well on managers as it will boost their profile and their CV
- focusing on growth will also fend off takeover bids, this gives executives a ‘quiet life’
3
Q
How is quality another objective for firms?
A
- some firms will seek to produce high quality product, perhaps with ethical or environmental considerations being of high importance.
4
Q
What is revenue maximisation?
A
Executive pay and bonuses are often linked to revenue
5
Q
What is market share (output/sales maximisation)?
A
High levels of market share may give firms some monopoly power
6
Q
What is the divorce of ownership and control?
A
