ACCA Applied Knowledge · Business and Technology · The purpose and types of business organisation
A privately owned manufacturing company states that its primary purpose is to maximise the wealth of its owners by generating the highest possible long-term profit. Which type of organisational objective does this statement describe?
The statement describes a primary financial objective. Profit-seeking businesses usually have maximising owners' wealth as their main overriding aim, and other goals such as quality or staff welfare are secondary objectives that support it. Wealth maximisation through long-term profit is therefore the primary objective.
- AA primary financial objectiveCorrect
- BA secondary non-financial objective
- CA social responsibility objective
- DA statutory compliance objective
Explanation
Primary objectives are the main overriding aims of a profit-seeking business, typically maximising owners' wealth through profit. Secondary objectives support the primary one, such as product quality or staff welfare. The statement here is about wealth maximisation, so it is primary and financial.
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