Goals of firms

chapter 4

1. Sales Revenue
Maximization
when a firm makes as much revenue as possible

1. Sales Revenue
Maximization
-

easy for firms to raise finance

cheaper to sell in bulk

2.Growth aka Sales

Maximisation
-

managers, directors and chief executives want

their business to grow by maximizing their sales

- their status and pay depend on the size of the they run

3.Profit Satisficing

, directors and chief executives need to keep their sh

dividends

4.Improvement of the
environment and social
responsibility

clean up their production processes

they source their raw materials from firms that dont

4.Improvement of the
environment and social
responsibility

4.Improvement of the
environment and social
responsibility

CSR
https://www.youtube.com/watch?v=cSNUyKV1ybo
https://www.youtube.com/watch?v=Nly_OdvORQY

5. Profit Maximisation

en the possible gap between Revenue and Cost is gre

encourages more firms to enter a competitive mark

more finance to update their

capital equipment a

ms to obtain external finance, to recruit top manager

5. Profit Maximisation
Ways of Increasing Profit
A. Reduce Costs of Production
B. Raise Revenue

5. Profit Maximisation
A. Reduce Costs of Production

reducing waste and inefficiency

5. Profit Maximisation
A. Reduce Costs of Production

increasing the productivity of factors of

production

t run but lower average costs and increased

revenue in the lon

5. Profit Maximisation
A. Reduce Costs of Production

the firm through mergers

and takeovers

5. Profit Maximisation
A. Reduce Costs of Production

5. Profit Maximisation
B. Raise Revenue

Changing the Price

Elastic Demand

-> Decrease the Price

Inelastic Demand -> Increase the Price

5. Profit Maximisation
B. Raise Revenue

Increasing Demand
improve the quality of the products
advertising

Homework- Text Book

Activity 2-page 262
Multiple Choice Questions page 298
Homework- Workbook:
Structured Questions:
1. Ryanairs profits fall (page 42)

Multiple Choice Questions

Answers:
1. C, 2. D, 3. B, 4. A, 5. B, 6. D