23 Analyse why a company that has become the market leader might change its objective from market share to max profit

[Sir Afzal Shad]

23 Analyse why a company that has become the market leader might change its objective from increasing market share to maximising profit [3]

[Shaliza khawaja]

As they already have reached market dominance expanding further could become costly and less rewarding
for example after cappturing most market share for smartphones, samsung might focus on maximising profit through newer models with improved efficiency
by doing this they are not just improving there product quality but also reducing unneccesary cost since branding is already done, they will be earing more from existing products, in the long run it helps maintain strong financial performance and stability for the business

[Mamoona Hussain]

KN: Because further growth in order to increase sales can be costly.
APP: For instance, a multi national fast food chain like McDonald's will be wasting finance if it keeps opening up new branches. It would be more efficient if they increased profits through introducing deals or adding new products to their menu.
AN: Due to this they will be able to attract more customers which will improve brand image and reputation in the market, enabling them to charge higher prices, which will increase their revenue and profits generated. This ensures the long term survival and competitiveness of the business.

[areeshasaber]

[kn] the business has already achieved their objective.
[app] for example, coke has dominance over the market share, changing the objective to profit maximization could have more benefits.
[an] it can increase revenue, increase consumer base and reduce cost of production.

[Abdul Hadi]

KN: The main reason for profit maximizing by a business is that the business has achieved the leadership of the market share.
APP: for example a global mobile company like samsung may dominate global sales so it may shift its focus towards profit maximizing.
AN: The comapny may reduce its costs of marketing (which it needed in order to capture market) in order to maximise profits, it can easily raise the prices to maximize profits due to a loyal customer base to its advantage, the firm may focus on improving efficiency and productivity in order to lower costs and maximize profits.

[LintaHassaan]

After already achieving market leadership, the further gain in market share causes the marginal cost of each extra customer to rise,leading to diminsihing returns for the business.for eg a smartphone manufacturer already dominates the market so it will be of little benefit nd costly to advertise its exsisiting products to gain a further 5% market share .hence it stops chasing market share nd focuses on profit maximization.This leads to the company to research and develop thus innovate its products hence adding value to it which can enable premium pricing for the products .Further leading to increased profit margins .

[shamaim shakeel]

Knowledge Point:
Once a company becomes the market leader, it may shift its main objective from increasing market share to maximising profit because it already holds the largest customer base and no longer needs to focus on growth through expansion.
Application
For example, Nestle has become one of the top food industry brands and is trusted by mothers for products like Cerelac and Nido. Since it already has loyal customers and a strong reputation, Nestle now focuses on increasing profit margins by slightly raising prices and cutting production costs instead of chasing more market share.

Analysis:
Because the brand is already well established, spending more to gain extra customers would not be very effective. By concentrating on profit, Nestle can earn more from its existing loyal customers. This higher profit can be used for research, product improvement, and marketing, helping the company maintain its strong market position while growing financially.

[Subhan Zafar]

{KN}Promotional discounts and advertising create cost pressures that reduce profit margins so the business changes its objective from market share to maximize its profits.
{APP}For example, Coca-Cola may spend heavily on promotions and advertising to grow its market share. However, these activities create cost pressures that reduce profit margins, as large marketing expenses eat into revenue. As the market leader, further increases in market share bring limited returns, so the firm may shift its focus towards maximizing profit instead.
{AN}By prioritizing profit maximization, Coca-Cola can concentrate on cost efficiency and premium products such as Coca-Cola Zero. This enables the company to increase profitability and deliver higher returns to shareholders. In the long term, maintaining strong profits helps Coca-Cola remain financially stable and sustain its market leadership position.

[Muaz Aamir]

KN:
When a company becomes the market leader, it already holds the largest share of sales in its industry, so gaining more market share becomes less important.

AP:
For example, Pepsi in Pakistan might shift its focus from increasing market share to maximising profit once it already dominates the soft drink market.

AN:
The company may now aim to raise prices slightly to boost profit margins. It might reduce marketing costs since it already has strong brand awareness. It could also focus on improving efficiency to earn higher profits from its existing customer base.

[Shuraim Arif]

(KN) This is because spending more on market share could become costly and less rewarding.
(APP) For example, TGH, a leader of the car manufacturing market, would spend more on maximizing profit rather than increasing market share as it is already the leader of the market and spending more would be a waste of money.
(AN) Focusing more on maximizing profit pushes the business to innovate new products and try new strategies to get an increase in sales, making it a lot more creative and hence, gives them another competitive edge by having an element of USP, which allows it to set higher prices, and therefore earn a higher profit per unit produced.