This revision webinar video recording considers the different objectives that business might have in different markets. These range from profit and revenue maximisation to sales maximisation and satisficing behaviour in contestable markets.
Types of Firms Key Note Summary
AGENT OF A FIRM
Someone who agrees and is authorized to act (make decisions) on behalf of someone else – the Principal
DIVORCE OF OWNERSHIP AND CONTROL
When the owners of a business do not control key day-to-day decisions such as pricing, investment and marketing
A business organisation such as a corporation that produces and sells goods and services in markets
NOT FOR PROFIT ORGANISATION
Businesses that are operated commercially but with social welfare and environmental aims in mind. Typically, the profits are reinvested for social purpose.
PUBLIC SECTOR ORGANISATION
Organisations that are owned and controlled by the state e.g. the NHS, social care, state schools, ther Police, HM forces
PRINCIPAL OF A FIRM
The principal of a firm is the owner – they have an equity stake in the business
PRIVATE SECTOR ORGANISATION
Private sector organisations are owned by private investors rather than the state. 84% of jobs in the UK are in the private sector
The excess of revenue over cost. Total profit = total revenue – total cost. Profit per unit = price – average cost
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