Business objectives

Overview

What a firm may be aiming at: staying afloat, the largest profit, the largest sales, a bigger share of the market, lower costs, happier staff, happier customers, or a social purpose.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   Define the business objective of survival.

   Model answer

   Survival is a business objective focused on generating enough revenue to cover costs and continue operating, typically prioritised during difficult trading conditions or when a business is newly established.

2. 2

   When is survival most likely to be a business's primary objective?

   Model answer

   During difficult trading conditions (such as economic downturns or increased competition) or when a business is newly established.

3. 3

   What is meant by profit maximisation as a business objective?

   Model answer

   Profit maximisation is a business objective that aims to achieve the highest possible level of profit, calculated as the greatest difference between total revenue and total costs.

4. 4

   How is maximum profit determined in relation to revenue and costs?

   Model answer

   Maximum profit occurs when the difference between total revenue and total costs is at its greatest.

5. 5

   Define sales maximisation as a business objective.

   Model answer

   Sales maximisation is a business objective focused on achieving the highest possible volume or value of sales, sometimes at the expense of short-term profit.

6. 6

   Why might a business pursuing sales maximisation accept lower short-term profits?

   Model answer

   Because achieving the highest possible sales volume or value may require lower prices or higher marketing costs, which reduce profit margins in the short term.

Other ways to work this

The same content, four other ways.

What is inside Levo

Six ways to work the same material.