Question

Three different objectives relate to a firm's profit, which is often measured in terms of return on investment. One objective, known as _________, is when a company gives up immediate profit in exchange for achieving a higher market share in the hopes of penetrating competitive markets.

Answer 1

Answer:

Managing for long-term profits

Explanation:

There are three different objectives that relate to a firm's profit, and they are measured in terms of return on investment (ROI) or return on assets (ROA).

1. Managing for Long-Run Profits

2. Maximizing Current Profit

3. Target Return

1. Managing for Long-Term Profits: This occurs when firms give up their immediate profit

in exchange for achieving a higher market share in the hopes of penetrating competitive markets. The firms product are low in price compared to their cost of production but the firm expect to make more Profits in the future and cover its cost of production.

2. Maximizing Current Profit: This is when firms maximises their current Profit.

3. Target return: This is when board of directors of a firm sets a specific Profit goal to be met at a given period of time.

Answer 2

Answer: Managing for Long-Term Profits

Explanation:

When the immediate profit is given up by companies by developing quality products in order to penetrate competitive markets over the long term.

Products are priced relatively low when compared to their development cost, but the company later expects to make greater profits because of the company's high market share.