There are five main goals in firms. The goals are established to promote day to day objectives in the firm. These goals are maximise profits, meeting shareholder expectations, increasing market share, maximising growth and satisfying behaviour. As well as the goals, firms try to achieve internal and external economies of scale. Internal and external economies of scale are achieved in different ways as the internal is achieved by expanding and the external is achieved by industry growth.
Maximising profits is the goal to make the biggest profit and the smallest loss. This is achieved by using low cost combination of resources to achieve a big profit. This goal is usually seen as the main goal of any firm as it’s the driving force for people to achieve well for their business.
Meeting shareholder expectations is another goal of the firm that is valued as highly as maximising profits. Company directors are in charge of meeting the needs of the shareholder. The job of the director is to full fill this goal of the firm. This goal may cause conflict as the way the director wants handle the method he goes about achieving this goal may be criticised. An example of this is they could try to meet the demands of the shareholders now and not take into consideration the long term effects of the business. Also increasing dividends sometimes could collide with the business goal of maximizing profits and either goal may be put before one another one.
Increased market share this goal is trying to achieve more investment into the firm. Shareholders run their own risk investing in the firm as they try to seek maximum profit as reward for their risk taking. While mangers invest in the company by working in it they are paid a wage as reward for their investment. Sometimes the value of one investor is taken over another as decisions are made to either maximise... [continues]
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