Pearson Edexcel · A-Level · Economics B
Course version: 9EB0 · Version from Sept 2015
B) Other objectives: o survival o market share o cost efficiency o return…
Full specification wording
Business objectives: b) Other objectives: o survival o market share o cost efficiency o return on investment o employee welfare o customer satisfaction o social objectives
Businesses pursue various objectives beyond profit maximisation.
Checked against the Pearson Edexcel 9EB0 specification (opens in a new tab) on .
- Point 2 of 2
- 4 key terms
Study notes
From the checked teaching notes for this specification point.
The idea
Businesses pursue various objectives beyond profit maximisation. Survival is crucial for start-ups or during economic downturns. Firms may aim to increase market share to gain monopoly power and economies of scale. Cost efficiency involves minimising average costs to remain competitive. Return on investment (ROI) measures financial gain relative to capital expenditure, satisfying shareholders. Employee welfare focuses on staff well-being, reducing turnover and boosting productivity. Customer satisfaction ensures brand loyalty and repeat purchases. Finally, social objectives involve corporate social responsibility, such as reducing emissions or supporting local communities, which can enhance public relations and long-term viability.
What earns the marks
- Identify survival as a primary objective for new businesses or during periods of economic recession.
- Explain how increasing market share can lead to greater market power and economies of scale.
- Define cost efficiency as the minimisation of average total costs to improve competitiveness.
- Calculate or interpret return on investment (ROI) as a measure of financial performance.
- Evaluate the trade-offs between social objectives or employee welfare and short-term profit maximisation.
Common mistakes and how to put them right
Assuming profit maximisation is the only business objective.
Put it right: Recognise that firms often pursue multiple alternative goals like market share or social objectives.
Confusing market share with total sales revenue.
Put it right: Market share is the percentage of total industry sales held by one firm, not the absolute revenue figure.
Viewing employee welfare as purely a cost.
Put it right: Understand that investing in employee welfare can increase productivity and reduce recruitment costs, potentially increasing long-term profits.
Exam tips
- Use a specific business example, such as a supermarket aiming for market share, to contextualise different objectives.
- When evaluating business decisions, consider how pursuing customer satisfaction might conflict with cost efficiency in the short run.
- Always link return on investment (ROI) to shareholder expectations and the opportunity cost of capital.
Try the lesson
The start of the Business objectives: b) Other objectives: o survival o market share o cost efficiency o return on investment o employee welfare o customer satisfaction o social objectives lesson, made from checked teaching notes for this specification point.
Have a go first
A newly established business in a highly competitive market is struggling to cover its costs in its first year of trading. Which of the following is most likely to be its primary business objective?
Listen
Businesses pursue various objectives beyond profit maximisation. Survival is crucial for start-ups or during economic downturns. Firms may aim to increase market share to gain monopoly power and economies of scale. Cost efficiency involves minimising average costs to remain competitive. Return on investment (ROI) measures financial gain relative to capital expenditure, satisfying shareholders. Employee welfare focuses on staff well-being, reducing turnover and boosting productivity. Customer satisfaction ensures brand loyalty and repeat purchases. Finally, social objectives involve corporate social responsibility, such as reducing emissions or supporting local communities, which can enhance public relations and long-term viability. A strong answer earns marks for these points. Identify survival as a primary objective for new businesses or during periods of economic recession. Explain how increasing market share can lead to greater market power and economies of scale. Define cost efficiency as the minimisation of average total costs to improve competitiveness. Calculate or interpret return on investment (ROI) as a measure of financial performance. A common slip: Assuming profit maximisation is the only business objective. Instead, recognise that firms often pursue multiple alternative goals like market share or social objectives. Exam tip: Use a specific business example, such as a supermarket aiming for market share, to contextualise different objectives.
See it
Key words
Say what each word means before you turn the card.
Survival
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Market share
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Cost efficiency
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Return on investment (ROI)
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See every definition
- Survival
- A primary objective for new businesses or during periods of economic recession.
- Market share
- The percentage of total industry sales held by one firm, not the absolute revenue figure.
- Cost efficiency
- The minimisation of average total costs to improve competitiveness.
- Return on investment (ROI)
- A measure of financial performance, calculated or interpreted as financial gain relative to capital expenditure, satisfying shareholders.
Label the diagram
Some boxes have lost their names. Pick the right name for each number.
1Box 1
2Box 2
3Box 3
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