Corporate Social Responsibility and Business Objectives

The video explores the concept of profit maximization in traditional economic theory, explaining its importance for reinvestment, dividends, and cost management. It also discusses why some firms may not maximize profit due to scrutiny and stakeholder impact. The concept of profit satisficing is introduced, where businesses balance profit with stakeholder satisfaction. Alternative objectives like revenue and sales maximization are covered, highlighting their benefits and challenges. The video concludes with a discussion on survival strategies and corporate social responsibility, emphasizing ethical practices and sustainability.

Why might a firm reinvest its profits back into the business?

• To expand into new markets

• To reduce taxes

• To upgrade capital and technology

• To increase employee wages

What is one reason firms might not aim to maximize profits?

• They aim to reduce their revenue

• They prefer to increase their costs

• They do not want to grow their market share

• They want to avoid scrutiny from regulators

What does profit satisficing aim to achieve?

• Increase the firm's market share

• Reduce the number of employees

• Satisfy as many key stakeholders as possible

• Maximize profits at all costs

Which stakeholders are likely to be unhappy with profit maximization?

• Shareholders and managers

• Entrepreneurs and investors

• Consumers and workers

• Managers and shareholders

Where does revenue maximization occur?

• Where average cost equals average revenue

• Where total revenue equals total cost

• Where marginal revenue is zero

• Where marginal cost equals marginal revenue

What is a potential benefit of revenue maximization?

• Increased competition in the market

• Lower average costs due to economies of scale

• Reduced market share

• Higher prices for consumers

What is the goal of sales maximization?

• To become as large as possible without making a loss

• To maximize profits at all costs

• To reduce the number of employees

• To increase the firm's market share

Why might a firm adopt a survival objective?

• To increase shareholder dividends

• To maximize short-term profits

• To spread brand awareness in a competitive market

• To reduce employee wages

What is the primary objective of public sector organizations?

• Reduce costs

• Maximize profits

• Increase market share

• Maximize society welfare

What is an example of corporate social responsibility?

• Reducing product quality

• Paying workers and suppliers fairly

• Increasing consumer prices

• Maximizing profits at all costs