Objectives of the firm/business
- Profit maximization. This is a major objective of the firm. The firm tries to minimize the costs and maximize the revenue the revenue in order to maximize Profits are maximized at a point where marginal cost equals to marginal revenue.
- Sales revenue maximization. The firm may aim at increasing sales through reduced prices, advertisement and other incentives given to customers with the aim of maximizing the sales revenue.
- Good image. Some firms do not aim at profit making but to serve the community and maintain their reputation especially parastatals. This can be achieved by fixing low average prices, providing quality products and services that are appropriate to community needs.
- Market expansion. Firms aim at getting a bigger market share as compared to their competitors through market research, supplying good quality products, advertisement etc.
- Long run survival. The firm may operate in such way to exist for a long time. This can be achieved through proper management and making proper decisions.
- Entry limitation. Some firms are interested in preventing other firms from entering the industry. This is achieved by setting lower prices that make entry of new firms in the-industry un attractive. This is referred to as limiting pricing policy.
- Employee welfare maximization. Some firms aim at maximizing the welfare of their workers increasing the wage and non-wage benefits,
CATEGORIES Economics
TAGS Dr. Bbosa Science
