Chapter 2 - The objectives of firms

usman ahmed
Mind Map by , created almost 6 years ago

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usman ahmed
Created by usman ahmed almost 6 years ago
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Chapter 2 - The objectives of firms
1 Normal profit-minimum cost needed to remain in the industry
1.1 Supernormal profit is anything above normal profit
2 Divorce of ownership from control - Any firm in which there are shareholders and managers
2.1 Sales maximisation - P=MC
2.2 Profit satisficing - making enough profit
2.2.1 Is a form of X efficiency
2.3 Profit maximisation - produce where MC = MR
2.4 cost plus pricing
2.5 Managerial theory
2.6 Organisational theory - relative power
3 Social objectives
3.1 Ethical supply chain
3.2 Environment
3.3 British goods only
4 PLC-LTD
5 Short term loss for long term profit
6 Growth
6.1 internal or Organic
6.2 External
6.2.1 Vertical integration forward/backward
6.2.2 Horizontal
6.2.3 Conglomerate
6.2.4 Lateral
7 Technological change
7.1 Lower MES
7.2 Better quality
7.3 LRAC lowered
8 Revenue maximisation, where MR=0

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