It is because of this business has to meet the needs of workers and make them a satisfied lot. Q3 = Marginal cost pricing (P=MC) – allocative efficiency, Q4 = Sales maximisation – maximum sales while still making normal profit (AR=ATC). Requisite Organization (RO) has been proven time and again (in some surprising large organisations around the world). the growth of supermarkets have lead to the demise of many local shops. This could occur for various reasons: This is similar to sales maximisation and may involve mergers and takeovers. More profit can be used to finance research and development. Therefore managers may create a minimum level of profit to keep the shareholders happy, but then maximise other objectives, such as enjoying work, getting on with other workers. Owners often have different objectives that those appointed to manage the firm’s operations. Wherever they are working for living the workers should be motivated to work for the organization so as to make the organization forehead amidst fierce when the business is able to attract best talent towards its organization. Higher profit means: However, in the real world, firms may pursue other objectives apart from profit maximisation. In contrast, not-for-profit firms may simply wish to maximise sales volume, or another, non-commercial objective. Supply of Quality Goods and Fair Prices. not sacking them) This is the problem of separation between owners and managers. More market share increases its monopoly power and ability to be a price setter. Supplier supply the raw materials with the help of which goods are manufactured. – from £6.99. Customers are the ultimate source of happiness to a business. 1) Earning Profit What business objectives cannot be pursued at the same time and why. Of quality which is necessary to satisfy its wants and business will also ensure that whatever is being made available to the community is being made available at competitive and fair price. Firms often seek to increase their market share – even if it means less profit. Economic Objectives: Economic objectives of business refer to the objective of earning profit … Commentdocument.getElementById("comment").setAttribute( "id", "afe800c1d6bfa41a73a964768ac92a4b" );document.getElementById("ha9d9ccfd3").setAttribute( "id", "comment" ); Cracking Economics For example, a business wants to set up its franchise in another state in the next 3 years or it wants to increase its workforce in the coming months. Examples of alternative business objectives An increasing number of companies are moving away from profit maximisation and are refocusing their priorities towards the welfare of their suppliers, employees and the planet: Revenue maximisation (occurs where marginal revenue = zero) Increasing and protecting their market share Yes, of course you can ‘promote’ work satisfaction. This can be better done by educative and repetitive advertisement and by satisfying the customers who are patronizing so that they may stick and ask other to follow them. A. Objectives of business are the purpose for which the business is established and performed. In this, complex and competitive industrial and commercial world everyone tries to woo the customer. The community pays for goods and services the business offers to it. A fair deal to workers helps the business in this direction. Usually, in economics, we assume firms are concerned with maximising profit. Fair Deal to Suppliers. Sometimes there is an overlap of objectives. Social Objectives of Business. Business activities are essentially measured in terms of money, all measurements must show profit. Innovation is again an important objective of a business. This is a problem because although the owners may want to maximise profits, the managers have much less incentive to maximise profits because they do not get the same rewards, (share dividends). RO can reform policing in the US as well as the CDC and very quickly – if it wasn’t for those seriously habituated to (and have strong, self-justifying arguments for) the alpha-power hierarchy – the organising scheme of our forgotten ancestors/our base survival instincts. Whatever may be the type of business the suppliers form the basis of the entire business community. Urwick says “earning of profit cannot be the objective of a business any more than eating is the objective of living”. No doubt profit is driving force in undertaking any business activity but not the only objective of business. Innovation of goods and services customers policies, production quality, service facility etc. It is a common belief that money chasing is the only objective of a business. An objective is a target set by a business. This can ultimately help profitability as the brand becomes more attractive to consumers. Similarly suppliers supply the goods to a commercial venture for onward supply to the ultimate consumers. Increased market share increases monopoly power and may enable the firm to put up prices and make more profit in the long run. For example, seeking to increase market share, may lead to lower profits in the short-term, but enable profit maximisation in the long run. Higher profit makes the firm less vulnerable to takeover. We can … This is an important objective. Increasing market share may force rivals out of business. It will help the business to attract more customers if it tries to innovate in its field of activities. Sometimes there is an overlap of objectives. Our site uses cookies so that we can remember you, understand how you use our site and serve you relevant adverts and content. Thus the business has to ensure in its own interest as the supplier is the basic link between the business and community. Economic Business objectives are perhaps one of the major objectives for launching a business. For example, seeking to increase market share, may lead to lower profits in the short-term, but enable profit maximisation in the long run. To run the business successfully it is necessary to earn profit. Click the OK button, to accept cookies on this website. Generally objective of business is to make profit and avoid loss. A firm may incur extra expense to choose products which don’t harm the environment or products not tested on animals.