Business → combine factors of production to make products which satisfy people’s wants.
An objective is an aim that a business would like to achieve. These are the five most important objectives:
- PROFIT: Without any profit at all in a business owned by private individuals, the owners are likely to close the business. But a business won’t always aim to make as much profit as possible; e.g: if a firm decides to raise the prices of their products, consumers will probably stop buying their goods. Therefore, the owners of a business will aim for a satisfactory level of profits, which will save having to work many hours and pay less amount of tax to the government.
- VALUE ADDED: It is the difference between the selling price of a product/service and the cost of bought in materials and components. Higher added value means value of the firm’s output increases, it sells goods in a more expensive market and it has the chance to earn higher profits - as long as it increases prices by more than costs. A business can increase value added by presenting items in attractive displays, add features to a product, etc.
- GROWTH: the owners and managers will aim for growth in the size of the business for a number of reasons: make jobs more secure, increase salaries and status of managers, obtain higher market share from growth in sales, etc.
- SURVIVAL: This is usually a new company’s main aim, as being new to the market is usually less secure. But also new competition might threat a firm, so businesses might lower the prices - which will mean lower profits.
- PROVIDING A SERVICE: Some businesses are owned by the government. The main aim of these is to provide an essential service to the public (such as water, electricity, education, etc.), rather than making as much profit as possible.
