3.1 Business Objectives

Profit maximisation

Main assumption for firms to achieve the highest level of profits possible: where MR=MC

Sales maximisation

Producing where AR=AC, the highest possible output a firm can sustain in the long run

Revenue maximisation

Producing where MR=0, keep producing more output as long as it adds to revenue

Sales volume maximisation

Producing at a point where TR=TC, to maximise the volume of sales

Growth maximisation

Aim to grow as large as possible, often to achieve a higher market share

Utility maximisation

Firms/managers aim to produce where they gain the maximum satisfaction

Profit satisficing

Managing a firm to make a level of profits to satisfy the main stakeholders

Social welfare enterprises

Non-profit-making firms that aim to improve social welfare, the well being of a community or country

Corporate social responsibility (CSR)

Actions that a firm takes in order to demonstrate its commitment to behaving in the public interest

The principal-agent problem

This arises from conflict between the objectives of the

principals and their agents, who take decisions on their

behalf