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Is profit the main objective for business? Profit can be described as whatever is left from revenue after costs have been deducted. But is this the main target for every business?

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Introduction

Is profit the main objective for business? Profit can be described as whatever is left from revenue after costs have been deducted. But is this the main target for every business? All business have objectives (goals which are set out by the people who lead or control the organisations), whether they are big or small and whether they are in the primary or public sector. The performance of a business could be judged on how effectively it achieves its objectives. It is often argued that the main aim of private sector businesses is to maximise their profits. It may be reasonable to assume that firms aim for as much profit as possible. In practice a business is more likely to have a satisfactory level of profit as an objective. I carried out a questionnaire (can be seen in appendix), and interviewed many entrepreneurs (an individual with a flair for business opportunities and risk taking). From my results I can see that it is true that the majority's aim at start is to make profits, but in a long-term is to keep costs as low as possible. ...read more.

Middle

If a firm is able to grow and dominate the market, in the future it may be able to enjoy some monopoly power and raise its price. By growing, a firm can diversify and reduce the risk of business enterprise. It can sell to alternative markets and introduce new products. If one market or product fails it will have a range of others to fall back on. Firms can exploit economies of scale if they grow large enough. This will enable them to be more efficient and enjoy lower costs. Owners of small firms may not want to expand their output to a point where their profits are maximised. This may be because 1. it involves employing more workers, making more decisions and working longer hours 2. they may want to keep their turnover below the VAT threshold, avoiding the need to charge their customers VAT and filling in VAT returns. 3. they are happy with a satisfactory profit level and their current lifestyle From the results of my questionnaire, I have found out that in recent years firms have started to appreciate how important their image is. ...read more.

Conclusion

By carrying out both primary and secondary research, I have found out that there are other factors that influence the choice of objectives. Firstly, the size and status of the firm. For example, many small businesses may be content with profit satisficing or survival. Larger companies may aim for growth and market domination. In addition, the age of the business. Businesses starting off may be content with survival. Later, when they are established, they may pursue other objectives. Also, the state of the economy may effect business objectives. During a recession many firms, both large and small, concentrate on survival. During normal trading conditions other objectives will be important. Finally, whether the business is in the public or private sector. Public sector businesses focus rather more on providing a service than profits. This document was downloaded from Coursework.Info - The UK's Coursework Database - http://www.coursework.info/ This document was downloaded from Coursework.Info - The UK's Coursework Database - http://www.coursework.info/ This document was downloaded from Coursework.Info - The UK's Coursework Database - http://www.coursework.info/ This document was downloaded from Coursework.Info - The UK's Coursework Database - http://www.coursework.info/ This document was downloaded from Coursework.Info - The UK's Coursework Database - http://www.coursework.info/ This document was downloaded from Coursework.Info - The UK's Coursework Database - http://www.coursework.info/ ...read more.

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