Business Objectives (Edexcel A Level Business)
Revision Note
Written by: Steve Vorster
Reviewed by: Jenna Quinn
Survival & Profit Maximisation
Businesses can have a range of objectives when they start up
These objectives may change over time
The aim of most start up businesses is to survive the initial entry into the market and to generate enough cash flow to remain in business
Effective cash flow management is more important than gaining an income or seeking profit maximisation
Once that has been achieved, the business objective usually switches to profit maximisation
Profits benefit shareholders as they receive dividends and increase the underlying share price
An increase in the underlying share price increases the wealth of the shareholder
Other Business Objectives
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
The increased costs will reduce the level of profit in the short term
However, it may lower costs in the long term as they can retain employees, which lowers recruitment and training costs
Common Business Objectives
Objective | Explanation |
|---|---|
Sales maximisation |
|
Market share |
|
Cost efficiency |
|
Employee welfare |
|
Customer satisfaction |
|
Social objectives |
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