Manag., July-2016-Q3
0. Match the items of List–I with the items of List-II and select the code of correct matching:
| List–I | List–II |
| (a) Sales Revenue Maximization | 1. Williamson’s Model |
| (b) Maximization of a firm’s growth rate | 2. Cyert-March Hypothesis |
| (c) Maximization of Managerial Utility function | 3. Baumol’s Theory |
| (d) Satisficing behavior model | 4. Marri’s Theory |
- Option : A
- Explanation : > Baumol stressed that in competitive markets, firms would aim at maximizing revenue, through maximization of sales. According to him, sales volumes and not profit volumes, determine market leadership in competition.
> According to Marris, owners (shareholders) aim at profit and market share, whereas managers aim at better salary, job security and growth. These two sets of goals can be achieved by maximizing the balanced growth of the firm.
> Oliver Williamson’s model is a combination of the objectives of profit maximization and growth maximization, which proposes that managers would apply their discretionary power in such a way, as to maximise their own utility function, with the constraint of maintaining minimum profit to satisfy shareholders.
> Herbert Simon’s Satisficing Model says that a firm has to operate under “bounded rationality” and can only aim at achieving a satisfactory level of profit, sales, and growth.
> Cyert and March propose that businesses have to satisfy a variety of stakeholders, who have different and often conflicting goals; hence a firm has to aim at a multidimensional goal and exhibit a ‘satisficing behavior’.
