14.11.13
Business objectives: what does business do to get its objectives?
Diposting oleh Deky Suprianto di 21.11What does business do to get its objectives?
A
business combines factors of production to create products either good or
service. Surely a business needs factors of production such as land, labour,
capital and enterprise. Some objectives depend on some circumstances. Private
sector or public sector has different objective due to profit motive. Public
sector is a business that it is owned and run by government. Private sector is
a business owned and controlled by people or group of people. Public sector provides
services or goods to people that have paid taxes to government. Services are
provided by government such as education, healthcare, defence, water supply and
electricity supply. Companies which are running these businesses have less
motive profit. Government provides also goods such as fuel, gas and various
public infrastructures.
Private
sector runs with profit motive by giving excellent services or high quality
goods to customers. Some objectives of private sector business are:
Profit
maximisation
This
is happening when greatest different between costs of production with revenues
that company get. Profits are needed to cover cost of production, to pay
dividend for shareholders and to grow the company. Company has to consider
long-term profit than short-term profit. By using promotional pricing strategy
will benefit to get rid stock unsold but reduce profit.
Profit
satisfying
Sole
traders might satisfy at certain level of revenue. After they satisfied, they
will use their time for luxury activity. Shareholders as the owner of limited
company both private limited company and public limited company will be
satisfied as high as dividend given to them.
Growth
After
company has operated for some years, strengthening capital and has experienced
much, might become consideration to expand the business. Company can build new
branch or add capacity the current company by increasing its capacity of
production. It is called internal growth. When company is taking over or
merging other company to expand the business, it is called external growth.
Economic circumstance is in booming will boost business grow faster.
Survival
The
main objective for a new business is survival. Company can use penetration
pricing strategy to attract customers by lowering price than competitors’
price. The consequence is getting lower profit. After certain market share is
aimed, producer can increase price of the product. Economic circumstance is
recession suffering business to compete each other. Next year might be better
for a business so that can grow again.
Maximisation
of shares value
Public
limited company is listed to National Stock Exchange. Shares of plc are easily
to sell to other people. Shareholders are expecting high dividend and hoping
gain from the initial shares’ price. A business has to maintain its
performances due to give high dividend to shareholders.
Corporate
Social Responsibility
Nowadays are common for businesses to allocate
some money from their profit as a part of responsibility activity to society,
employees and environment. Business also gets recognition from society by
holding this activity
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