Business Objectives and Profit Maximisation
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Questions and Answers

What is one main objective of businesses pursuing profit maximisation?

  • To decrease market competition
  • To pay a return to the shareholders (correct)
  • To cut employee salaries
  • To reduce operational costs

    • When do businesses typically set survival as a primary objective?

  • During stable economic conditions
  • Only during times of high employee turnover
  • When there is intense market competition (correct)
  • When profits are exceeding expectations

    • How do objectives provide a sense of purpose within a business?

  • They help to excuse any failures
  • They hinder employee motivation
  • They complicate the business structure
  • They create clear instructions for employees (correct)

    • Which of the following is NOT a reason for a business to aim for profit maximisation?

    <p>To maintain employee loyalty</p> Signup and view all the answers

    What can negatively impact a business's survival objective?

    <p>High levels of market competition</p> Signup and view all the answers

    Which factor is a possible reason a business adjusts its objectives to focus on survival?

    <p>Economic changes such as a recession</p> Signup and view all the answers

    What role do objectives play in assessing business performance?

    <p>They provide benchmarks to measure results</p> Signup and view all the answers

    Why might a business prioritize profit maximisation over survival objectives?

    <p>To invest in innovative technologies</p> Signup and view all the answers

    What is the primary objective of increasing returns to shareholders?

    <p>To motivate shareholders to invest more</p> Signup and view all the answers

    Which of the following is a method to increase returns to shareholders?

    <p>Increasing dividends</p> Signup and view all the answers

    How can a business increase its overall profits?

    <p>By enhancing product quality</p> Signup and view all the answers

    What is one way a business can influence its size in the market?

    <p>By increasing its product range</p> Signup and view all the answers

    What could be an expected outcome of decreasing the cost of production?

    <p>Increased market share</p> Signup and view all the answers

    Which option best describes the goal of increasing market share?

    <p>To outperform competitors</p> Signup and view all the answers

    What is NOT a method for a business to increase its influence in the market?

    <p>Limiting staff training programs</p> Signup and view all the answers

    What financial metric is used to calculate returns to shareholders through dividends?

    <p>Profit per share</p> Signup and view all the answers

    What percentage was calculated for sales in the given context?

    <p>16.67%</p> Signup and view all the answers

    Which of the following is NOT an objective of providing community services?

    <p>Environmental pollution increase</p> Signup and view all the answers

    What does 'Ak' represent in the calculation from the content?

    <p>Percentage of market sales</p> Signup and view all the answers

    Why do businesses reinvest money according to the objectives outlined?

    <p>To assist in helping others</p> Signup and view all the answers

    In a dynamic business environment, how often do business objectives change?

    <p>That depends on market trends</p> Signup and view all the answers

    What is a primary focus within the environmental objectives of community service provisions?

    <p>Promoting green production methods</p> Signup and view all the answers

    Which of the following types of unemployment is specifically addressed through community services?

    <p>Unemployment among disadvantaged people</p> Signup and view all the answers

    Which of the following is NOT considered an internal stakeholder?

    <p>Consumers</p> Signup and view all the answers

    What role do suppliers play in relation to a business?

    <p>They offer credit or loans</p> Signup and view all the answers

    What is emphasized by the phrase 'Fastchanging Business' in the content?

    <p>Adaptability to market conditions</p> Signup and view all the answers

    Which entity is specifically mentioned as affecting the tax responsibilities of a business?

    <p>Government</p> Signup and view all the answers

    Who among the following is classified as an external stakeholder?

    <p>Local community</p> Signup and view all the answers

    What is the primary function of internal stakeholders in a business?

    <p>Providing services</p> Signup and view all the answers

    What is the formula for calculating market share?

    <p>sales of business / sales of industry x 100</p> Signup and view all the answers

    If a business has sales of $600 and the total sales in the industry are $1800, what is its market share?

    <p>33.33%</p> Signup and view all the answers

    Which of the following businesses has the highest market share based on the provided sales figures?

    <p>Bonanza</p> Signup and view all the answers

    Why would a business want to increase its market share?

    <p>To become a market leader</p> Signup and view all the answers

    What market share percentage does Khaadi hold based on the information provided?

    <p>44.44%</p> Signup and view all the answers

    What total sales figure corresponds to Al-Karam's market share?

    <p>$800</p> Signup and view all the answers

    What does maintaining a competitive market share allow a business to achieve?

    <p>Market stability</p> Signup and view all the answers

    What is the total sales figure for the entire clothing industry based on the provided data?

    <p>$1800</p> Signup and view all the answers

    What changes to business objectives are influenced by stakeholders?

    <p>They may result in higher prices for consumers.</p> Signup and view all the answers

    How does an increase in price affect consumer demand?

    <p>It generally decreases demand.</p> Signup and view all the answers

    Which of the following best describes the role of stakeholders in a business?

    <p>They have interests in and are impacted by business operations.</p> Signup and view all the answers

    What might happen to employees if technology is advanced too quickly?

    <p>Job loss could occur if they can't adapt.</p> Signup and view all the answers

    What can be concluded about the relationship between demand and quality?

    <p>Increased quality can lead to increased demand.</p> Signup and view all the answers

    Which factor is unlikely to influence employee motivation?

    <p>Increasing consumer prices.</p> Signup and view all the answers

    How might stakeholders respond to changes in business objectives?

    <p>They may oppose changes if it affects their interests.</p> Signup and view all the answers

    What is a potential consequence of a business acting solely in the interest of owners?

    <p>Neglect of stakeholder concerns.</p> Signup and view all the answers

    Study Notes

    Business Objectives

    • Businesses set objectives for clear direction for management and employees
    • Objectives give managers and employees a sense of purpose
    • Objectives help assess worker performance

    Common Business Objectives

    • Profit Maximization: This goal allows businesses to:

      • Pay returns to shareholders
      • Cover operating costs
      • Reinvest in the business

    • Survival: Businesses prioritize survival when facing:

      • Market competition
      • Economic downturns (recessions)
      • Uncertain events (wars, pandemics)

    Return to Shareholders

    • Businesses aim to increase shareholder returns to motivate investment
    • Methods to increase returns include:
      • Increasing profits (dividends)
      • Increasing share price

    Growth

    • Businesses may set growth as an objective to:
      • Increase profits
      • Lower production costs
      • Enhance market influence
      • Increase market share
      • Reduce competition

    Increasing Market Share

    • Businesses increase market share to stay competitive and become market leaders
    • Calculated as (Business Sales / Industry Sales) x 100

    Community Services

    • Businesses may aim to give back to society by:
      • Providing jobs to the unemployed and disadvantaged
      • Investing in the community
      • Using environmentally friendly practices

    Changing Business Objectives

    • Business environments are dynamic, leading to changes in objectives
    • Objectives shift based on achievements
    • Owner goals influence business objectives

    Stakeholders

    • Stakeholders are individuals impacted by business decisions
    • Stakeholders keep an active interest in business
    • Key stakeholders include:
      • Consumers: Their reactions to price and quality affect demand
      • Employees: Motivated by wages and job security
      • Technology can potentially reduce the amount of workers needed, impacting job security for employees

    Types of Stakeholders

    • Internal:
      • Owners (investors)
      • Employees
      • Managers
    • External:
      • Consumers (buyers)
      • Suppliers (providers)
      • Local Community
      • Government

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    Description

    This quiz covers key concepts related to business objectives, specifically focusing on profit maximisation and survival strategies. It explores the roles these objectives play in assessing business performance and influencing market presence. Test your understanding of how businesses prioritize objectives to achieve success.

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