- Business objectives may change over time
- The core objective usually remains profit maximisation, but the business may choose to also focus on a range of other objectives
- E.g. If a business focuses on employee welfare, it will increase its costs but raise the morale and productivity of its workers. In this example, the increased costs will reduce the level of profit in the short term, but may lower costs in the long term as they can retain employees which lowers recruitment and training costs
Common Business Objectives
Objective
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Explanation
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Sales maximisation
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- The focus is on generating the maximum revenue possible by selling its products/services
- The firm should raise prices to achieve revenue maximisation when their product is price inelastic in demand
- The firm should lower prices to achieve revenue maximisation when their product is price elastic in demand (see subtopic 1.2.4 for more information)
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Market share
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- Market share refers to the percentage of total sales in a particular market that a company holds
- A business may aim to increase its market share by producing and selling better quality products than its competitors
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Cost efficiency
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- Cost efficiency refers to a company's ability to produce and deliver its products at the lowest possible cost
- This objective is crucial for companies that operate in highly competitive markets as low costs enable them to compete with low prices
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Employee welfare
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- This objective refers to a company's commitment to providing a healthy and safe working environment for its employees
- A business may aim to promote employee welfare by offering competitive wages, comprehensive benefits packages and promoting a healthy work-life balance
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Customer satisfaction
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- A business may aim to achieve customer satisfaction by delivering high-quality products, providing excellent customer service and offering attractive pricing
- E.g. A restaurant may aim to achieve customer satisfaction by offering a welcoming atmosphere, friendly service and delicious food
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Social objectives
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- Social objectives refer to a company's commitment to addressing social or environmental issues
- This objective is increasingly important for businesses that aim to operate sustainably and build a positive reputation
- E.g. Superdry aims to reduce its environmental impact by using sustainable materials and minimising waste, while also promoting fair labour practices and contributing to social causes in the communities where it operates
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