Growth - Increased profitability 3.2.1
Growth - A common corporate objective which means expanding the sales revenue of a business, probably in the hope that profits will increase too.
Increasing profitability and providing a better return for investors and shareholders are particularly important for companies quoted on the stock exchange as shareholders may have purchased shares with an expectation that they will receive a certain annual return on their shares, known as dividends. This is normally achieved by increasing revenue and lowering cost per unit, resulting in increased profit margins.
A benefit of increasing profits as a growth objective is that besides the fact the business is making more money, it is more likely to encourage further investors and insulate the business from competition from current or new rivals
However, increasing profits may not be possible for a number of reasons, including an already saturated market and fierce competition from rivals who have either better products or a better brand image.
Increasing profitability and providing a better return for investors and shareholders are particularly important for companies quoted on the stock exchange as shareholders may have purchased shares with an expectation that they will receive a certain annual return on their shares, known as dividends. This is normally achieved by increasing revenue and lowering cost per unit, resulting in increased profit margins.
A benefit of increasing profits as a growth objective is that besides the fact the business is making more money, it is more likely to encourage further investors and insulate the business from competition from current or new rivals
However, increasing profits may not be possible for a number of reasons, including an already saturated market and fierce competition from rivals who have either better products or a better brand image.
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