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Question 4

The board of directors of a major pharmaceutical firm, Zenith PLC, wishes to prioritise long-term research and development (R&D) into rare diseases, which will limit short-run returns. However, they face significant pressure from institutional investors who require a minimum return on capital employed (ROCE) of 8% to prevent a call for an extraordinary general meeting (EGM). To balance these competing demands, the board decides to target an ROCE of exactly 8% and allocate all remaining investable funds to R&D.

Which business objective are the directors of Zenith PLC pursuing?

A

Profit maximisation

B

Sales maximisation

C

Profit satisficing

D

Cost minimisation

Markscheme

Business objectives Questions

  1. A Level
  2. /Economics
  3. /Business objectives

16 exam-style questions on OCR A Level Economics Business objectives. Each one has a worked solution and a mark scheme showing where the marks go.

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