Page 61 - Cambridge IGCSE Business Studies

5: Business objectives and stakeholder objectives

Stay in business
beyond the
first two years

Be socially,
ethically and
environmentally Make a profit
responsible in
its business
activities Business
objectives

Expand the
Increase size of the
market share
business

Figure 5.2 Business objectives

Survival

Profit: see Chapter 21, Many new businesses fail in their first or second year of trading, so survival is a
page 268. very important short-term objective for these businesses. Once they are established
they can focus on long-term objectives such as profit and growth.

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Profit
For many businesses, profit is an important objective. They aim to produce and

sell the level of output where there is the greatest difference between revenue and

Economies of scale: see
Chapter 16, page 219. total costs.
Growth
A business that decides to expand the size of the business in order to increase

output may benefit from economies of scale. This will reduce the cost of

producing each item and help to increase the firm’s competitiveness, revenue
and profi ts.
KEY TERM
Market share
Market share: the revenue As a business grows it may achieve a larger share of the market. Increased market
of a business expressed as a share oft en benefits a business in that it helps develop a strong brand image which

percentage of total market
makes it easier to sell the product to consumers.
revenue.
Corporate Social Responsibility (CSR)
Nowadays, many businesses take an interest in social, ethical and
environmental issues and the impact that their decisions and activities
may have on employees, customers, the community and the environment.
Businesses that ignore their social responsibility run the risk of bad publicity
and possible legal action. Both can affect the reputation, sales, revenue and

profits of a business.