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The more contemporary managerial theories of the firm examine the possibility that the firm is controlled not by its owners, but by its managers, and therefore does not aim to maximise profits. Although profit plays an important role in these theories as well, it is no longer seen as the sole or dominating goal of the firm. The other possible aims might be sales revenue maximisation or growth.
CLASSICAL THEORIES OF THE FIRM
Profit maximisation
Profit maximisation is the traditional approach to what is the objective of the firm. This theory assumes that the owner of the firm, who seeks to maximise personal wealth, controls the company...
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