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Published on February 17, 2014

Author: chandupulapa

Source: authorstream.com

OBJECTIVES OF THE FIRM: OBJECTIVES OF THE FIRM Presented by P. Chandra sekhar (M.B.A.*) (12NH1E0030) DEPT OF MANAGEMENT STUDIES VKR .VNB & AGK COLLEGE OF ENGINEERING INTRODUCTION: INTRODUCTION There are number of theories of objectives of firm. Single theory applicable to all firms is not available as firm purse more than one objective. profit maximization is considered as the objectives pursed buy almost all business firms. Alternate objectives of the firm: Alternate objectives of the firm 1)economic objectives: a)maximum growth rate b)desire for liquidity 2)non economical objectives a)survival b)building up public confidence for the product C)welfare d)sound business practices e)progressive management MAJOR THEORIES OF OBJECTIVES OF FIRM: MAJOR THEORIES OF OBJECTIVES OF FIRM Major theories Optimizing theories Non optimizing theories Profit maximization theory Managerial theories 1) baumol’s model 2) marri’s model 3) williamson ’ model Behavioral theories 1) simons’ model 2) Cyest and march model OPTIMIZING THEORIES: profit maximization theory: OPTIMIZING THEORIES: profit maximization theory Also called traditional or neoclassical theory Main aim is to produce large amount of profits Profit =TR-TC Profit increase market value of firm Conditions: Mc=MR maximization of profits i s possible If mc <MR no maximization of profits has to improve out put for profits If mc>MR no maximization of profits has to decrease out put Managerial theories baumal’s theory of sales revenue maximization: Managerial theories baumal’s theory of sales revenue maximization He says only Profit maximization is not main objective Maximization of sales revenue is main objective Sales volume can make us leaders in market In large organizations sales are linked with managerial remuneration so he try to increase revenue ex(ESOP) Marris hypothesis of maximization of growth: Marris hypothesis of maximization of growth Aims at balanced growth of firm depends on Demand for product &supply of capital If above both becomes equal it is said to be balnced Williamson model of managerial utility functions: Williamson model of managerial utility functions It’s a combination of profit maximization and growth maximization objectives This model states that manager makes use of their power for own utility function and maintains minimum profit for satisfying share holders Behavioral theory simons theory : Behavioral theory simons theory Firm carry out operations under bounded rationality and can only attain satisfactory profits ,sales ,growth Conducted a research: Modern business do not have adequate info And is uncertain about future by this it is difficult to attain profit , sales,growth objectives Cyest and march theory : Cyest and march theory Firm should orient towards multigoal and multi decision making Firm should fuilfill the conflicting goals of various stake holder PowerPoint Presentation: END

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