12 Outline two reasons why profit might be important to SBG. [4]

[BASEL Moderator]

SBG makes a range of products including specialist paints. It has 6 factories and 700 employees. All SBG’s employees are encouraged to be involved in decision-making. SBG’s products are exported to 16 countries using wholesalers as its main channel of distribution. The Managing Director said: ‘Our objectives are to grow and make a profit.’ He also recognises that all business activity creates externalities for SBG’s stakeholder groups.

12 Outline two reasons why profit might be important to SBG. [4]


Possible KN Points:
• Source of finance
• To ensure survival of the business/ avoid closure
• Measure/indicator of success of the business
• Measures the performance of managers
• Reward for risk-taking
• Decide whether to continue making or selling a product
• Attract investors