1. Amity Global Business School
PRESENTATION ON :
OBJECTIVES OF FIRM
Presented by:
Prashant Ranka
B.B.A.3rd sem.
Date : 05/09/2012
2. What is a Firm?
A firm (also known as enterprise or firms) is
an organization engaged in
the trade of goods, services, or both
to consumers. Firms are predominant in capitalist
economies, where most of them are privately owned
and administered to earn profit to increase
the wealth of their owners. Firms may also be notfor-profit or state-owned. A Firm owned by
multiple individuals may be referred to as
a company.
3. Firm objectives
Firm objectives are the goals of Firms – what the
firms wants to achieve. All firms have their own
objectives. I
4. Firm objectives importance
It is of great importance for a firms to have well-
defined objectives. These objectives will help the
firms to be clear about what it wants to achieve or
where it wants to go.
With objectives, the performance of a firms can be
assessed according to a standard, that is to say, how
effectively the firms has achieved its objectives
5. Major objectives
1.
2.
3.
4.
5.
There are five major types of firm
objectives:
Survival,
Profit Maximization,
Growth,
Sales Revenue Maximization,
Image and Social responsibility.
6. Survival
Survival objective is essential for any firm because
nowadays market is very tough. Surviving in the
world of competition is very important of every
firm.
A firm has to keep running if it wants to stand at
his place.
7. Profit maximization
Profit maximization means increasing profit as
much as possible or producing a level of output
which brings the most profit for the firms.
Usually, the main objective of a private sector
firms is to maximize its profits. However, things
may be different for a public sector firms.
The main objective of a public sector firms may be
to supply the best service in the past, although
nowadays, they are offering services in a more and
more sectors.
8. Growth
To survive, no growth may mean ‘final death’.
To introduce new products in order to meet
customer changing needs.
To reduce risks of firm: In fierce competition, if a
firm can not become strong enough, it is more
likely to be eaten up by other stronger competitors.
To have low costs and more profits on a larger
scale (economy of scale).
To make employees, managers, and owners all feel
happy and secure.
9. Sales Revenue Maximization
Reasons:
Sometimes, when managers and employees are
paid according to their sales revenues rather
than created profit, sales revenue maximization
may become the main objective of the firm.
The firm wants to enlarge the market share first
and then benefits in the long run.
Shortcomings:
This may be a shortcoming for a firm. Profit
maximization for a firm should be more
important than sales revenue maximization in
whatever situations.
10. Image and Social Responsibility
Image and social responsibility have become
more and more important objectives of firms.
There are some reasons why firms must consider
image and social responsibility to be their
objectives which are illustrated in the following
table:
11. Possible Reasons
Brief Explanations
Government legislation
Many laws have been passed to protect workers’ health
and safety, reduce discrimination against disabled workers
and protect the environment
Competitive pressure
Increasing competition has become a challenge for
modern businesses. If customers think badly of a business,
then the business is finished. The business’s market share
will be taken over by other companies
Sustainable development
Paying attention to image and social responsibility is key
to long term development
