Chapter 2 - The objectives of firms

Normal profit-minimum cost needed to remain in the industry
1. Supernormal profit is anything above normal profit
Divorce of ownership from control - Any firm in which there are shareholders and managers
1. Sales maximisation - P=MC
2. Profit satisficing - making enough profit
  1. Is a form of X efficiency
3. Profit maximisation - produce where MC = MR
4. cost plus pricing
5. Managerial theory
6. Organisational theory - relative power
Social objectives
1. Ethical supply chain
2. Environment
3. British goods only
PLC-LTD
Short term loss for long term profit
Growth
1. internal or Organic
2. External
  1. Vertical integration forward/backward
  2. Horizontal
  3. Conglomerate
  4. Lateral
Technological change
1. Lower MES
2. Better quality
3. LRAC lowered
Revenue maximisation, where MR=0

Resource summary

	Created by usman ahmed over 10 years ago