Business Objectives

Profit Maximization

Traditionally, the main business objective has been to maximize profits. More on this will come in topic 2.11, but firms essentially want more revenue and lower costs, because:

Profit = Revenue - Costs

Alternative Business Objectives

• Corporate Social Responsibility (CSR): When firms commit to ethical and environmental pledges to act responsibly for society

• Market share: What percentage of a market the firm has. Firms want a larger market share, as this means they control more of the market

• Satisficing: Sometimes, firms do not want to maximize profits, because attempting to reach that point will lead to too many sacrifices. Instead, the firm targets a point where they earn "enough"

• Growth: Firms want to increase their scale of operations and earn more profits.