IGCSE, A Level Business Student Forum

Q9 Analyse the possible objectives of owners /shareholders towards a business. [6]

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Possible Structure
[KN]
[AN]
[AN+]

[KN]
[AN]
[AN+]

[KN] Increase in revenue
[AN] Some owners prioritize revenue growth over short-term profitability
[AN+] They may reinvest earnings into the business to expand, gain market share, or increase the company's value over time.

[KN] Dividend income
[AN] Some shareholders, especially in mature companies, prefer regular dividend income.
[AN+] They invest for a consistent stream of income rather than relying solely on share price appreciation.

[KN] Profit Maximization.
[AN] Profit is often the top priority for owners and shareholders.
[AN+] Investors make investments in businesses with the hope of earning a return on their investment through capital gains, dividends, or both.

[KN] Market Share and Dominance
[AN]The company's shareholders may want to see it rise to the top of its industry or market.
[AN+] This goal entails building a solid competitive position and gaining a sizable market share.

[KN]as much profit as possible
[AN]this would cause the business to use methods like controlling costs
[AN+]this is most common in public ltd companies and hence reduces its wastages

[KN]long term growth
[AN]they are willing to forego immediate profits in favor of reinvesting earnings to expand the business
[AN+]This approach is common among startups and growth-oriented companies which keeps a business alive and fosters a delayed decline of the product

[kn] profit maximization [an] the owners of a business have one main objective and that is to acquire the most profits [an+]this can help the business in carrying out its business activities and even distribute the profits among the shareholders in terms of dividends

[kn] lower costs [an] to reduce the cost of production for the business so they may be able to get more profits [an+] this in turn can help the firm to lower their price and get more sales and hence more revenue

[kn]pofit maximization
[AN]ONE OF THE PRIMARY financial objective fo share holder is to see a return o investment through increased profits
[AN+]thus leading to higher dividends and profit maximization

[KN]ETHICAL AND SOCIAL RESPONSIBILITY
[AN]THEY MIGHT BE CONCERN ABOUT ETHICS AND SOCIAL IMPACTS AND THEY MAY WANT THE CO MPANY TO ENGAGE IN SOCIAL AND SUSTAINABLE RESPONSIBLE PRACTICES
[AN+]WHICH MEANS THE SHAREHOLDER WILLS ACRIFICE THEIR SHORT TERM PROFITS

[KN] profit maximization
[AN] both owners and shareholders would focuses on increasing their income
[AN+] doe this factor they would be motivated to work on the business

[KN] Market share
[AN] as an increase in market share means that most of the customs would be loyalty to this business
{AN+] this means that it would lead to higher sales thus the business would be expanding which will help the business achieve economics of scale

[KN] Growth and Expansion
[AN] Some owners aim to grow the business by reinvesting profits to expand into new markets.
[AN+] They may reinvest earnings into the business to expand, gain market share, or increase the company's value over time.


[KN] profit maximisation
[AN] Both owners and shareholders make as much money as possible to invest into businesses
[AN+] thus they focuses more on the businesses because they are motivated hence leading to higher sales

[KN]Long term Profitability
[AN]More reinvestment opportunities
[AN]hence,fostering future business growth



[KN]Growth
[AN]Shareholder/owner would want to increase output to reduce average cost of production and increase profit margins
[AN]Leading to economies of scale

[KN] social welfare
[AN] thus improve the living standards
[AN+] increasing demand for luxury goods as poverty will be reduced

[KN] bridge the gaps in the market
[AN] demand will be fulfilled
[AN+] helping the business gain maximum market share and become the trendsetter

[kn] business growth/expansion for shareholders
[an] this will ensure that the value of the shares increases
[an+] leading to maximum return on capital theyve invested

[kn] increasing profits
[an] as this will lead to further investing into the business
[an+] leads to business growth beneficial for both owners and shareholders as they recieve more in turn

KN] Market leadership.
[AN] Owners may want to secure a strong position to create dominance in the market which will result in strong comebacks in forms of profits.
[AN+] Thus this will satisfy the owner as well the shareholder as both may be getting their rewards.

[KN] Operational efficiency.
[AN] This will lead to a reduction in costs and less time wastage hence increasing productivity.
[AN+] This ensures growth in a profitable and sustainable way.