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Maximising market share is an example of a financial objective. This statement has been marked as untrue. By Maximising market share aren’t we Maximising shareholders wealth too?
Thanks in advance
No – not at all.
Market share is generally measured as what % of the total number of customers that the company has.
The easiest way of increasing market share is to reduce the price. If BPP dropped their prices to just $1 a book, their market share would increase enormously.
But they would then lose money on every book they sold and make a loss! That would certainly not increase shareholders wealth 🙂Incidentally I have uploaded lectures working through the whole of the December 2014 exam – you might find them helpful. Especially in terms of the approach to the exam.
Thanks John. I was confusing market share with market share price. In which case the statement would have been correct?
Yes – in that case it would have been correct 🙂
Do read carefully. The examiner was trying to trick you (because when you read too fast, most people would think the same as you did at first – even I thought so at first look, and I have obviously been seeing lots and lots of these sort of questions 🙂 ).
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