A LevelBusinessEdexcelRevision Notes1. Marketing & People1.5 Entrepreneurs & LeadersBusiness Objectives

Business Objectives (Edexcel A Level Business)

Revision Note

Test yourselfFlashcards
Steve Vorster

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

  • 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)

Market share

  • 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

Cost efficiency

  • 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

Employee welfare

  • 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

Customer satisfaction

  • 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

Social objectives

  • 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

Last updated:

You've read 0 of your 10 free revision notes

Unlock more, it's free!

Join the 100,000+ Students that ❤️ Save My Exams

the (exam) results speak for themselves:

    Test yourselfFlashcardsNext topic

    Did this page help you?

    Steve Vorster

    Author: Steve Vorster

    Expertise: Economics & Business Subject Lead

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.

    Jenna Quinn

    Author: Jenna Quinn

    Expertise: Head of New Subjects

    Jenna studied at Cardiff University before training to become a science teacher at the University of Bath specialising in Biology (although she loves teaching all three sciences at GCSE level!). Teaching is her passion, and with 10 years experience teaching across a wide range of specifications – from GCSE and A Level Biology in the UK to IGCSE and IB Biology internationally – she knows what is required to pass those Biology exams.