For many small local businesses struggling in a highly competitive market, survival may be the best they can hope for. In desperate times, firms may be forced to sell off assets to keep their creditors at bay. For many businesses, it seems a matter of surviving – breaking even. Co-operative businesses are founded on the goal of sharing proceeds of business with whole community – customers and workers. For example, giving training and long-term job security to its workers. A firm may also be concerned about the welfare of its stakeholders – suppliers, workers and customers. Body Shop ‘leader in human and animal rights.’ This corporate image may be part of a business strategy to maximise profits, but it could also be a genuine desire to promote altruistic goals. It may wish to cultivate a certain image and brand. Related to social/ethical concerns is the image/brand of a firm. It could have a tie-up with profit maximisation.Ĭorporate Image. Many big firms now place a key role in promoting their ethical policies arguably there may also be some marketing benefits to promoting ethical and social concerns. They may voluntarily take decisions which help the environment / local community. A firm may not be motivated by money but may seek to offer a service to the local community. It gives a strong position to dominate the market in the future. A firm like Walmart and Amazon have often pursued this goal of maximising market share. However, increasing market share can be a way to increase profits in the long-term. For example, starting a price war can lead to lower profits but enable higher sales. Growth maximisation may come at the expense of lower profits. They can do this by cutting price and increasing sales. An alternative to profit maximisation is for a firm to try and increase market share and increase the size of the firm. Many other objectives such as corporate image an increasing market share can be a way to maximise long-term profit. Higher profits enable a firm to pay higher wages, more dividends to shareholders and survive an economic downturn. They will do this by increasing revenue (price * quantity sold) and reducing costs. The most basic model of a firm assumes firms wish to maximise their profit. However, in the real world, there are many other objectives that a firm can pursue. Economic theory often assumes that firms are rational profit maximisers. A business has a variety of potential objectives from profit maximisation to cultivating good relationships with various business stakeholders.
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