The Goals And Objectives Of A Firm/company In The Modern Industry

 


 


 


 


 


Modern Economics


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Assignment 1 Question: 


Discuss the goals and objectives of a firm/company in the modern industry.


Economic theory and tools are necessary to make decisions and achieve the firms or organization’s aims or objectives more efficiently (Salvatore, 2015). Value or wealth maximization is a corporate objective in finance that depends on increasing the wealth of firms and shareholders.  The value of the firm represents the present value of all the expected future profits (Salvatore, 2015). The organization uses the available resources to achieve this objective. The economic profit is the difference between the total revenue and the implicit and explicit costs, while the business profit is the difference between the total revenue and accounting cost of production or explicit costs (Salvatore, 2015). The firms or organizations seek to maximize profits, and this allows them to distribute more dividends to shareholders, finance research and even attract talented employees for higher salaries. This is possible while the firms increase market share to be more competitive beyond the primary market, both sales and profit maximization help to enhance growth maximization (Salvatore, 2015).  The managers are agents of the shareholders and they make decisions that affect shareholders’ wealth. At a time when there is a globalization of economic activity, the managers maximize value by focusing on national, regional and global operations.  The utility maximizing concern is affected by the relations between the principles and agents. Increasingly, firms and organizations also consider social and environmental concerns as part of social responsibility and others focus on branding.


 


 


 


 


Assignment 2 Question:


Find in the news an event-taking place in a market, and analyze how supply/demand shock lead to a new equilibrium.


While there has been growing demand for electric vehicles, the limited supply of cobalt and lithium necessary for batteries is likely to affect in electric car industry. Cobalt is a byproduct of copper and nickel, and automakers like BMW and Volkswagen have sought long-term cobalt supplies to avoid paying higher prices in the future (Tsuge, 2018).  Glencore is one of the major procures, which know deals directly to the Chinese signing a massive deal that is likely to disrupt the Cobalt supply market (Tsuge, 2018). The electric vehicle industry has increased demand for cobalt, but su...