Chapter 4 The Nature, Purpose and Objectives of Firms
2. What factors give rise to transactional difficulties and costs?
3. According to the transactional view of the world what exactly are firms for?
4. According to the transactional view of the world what exactly is the function of entrepreneurship?
5. Think of a famous entrepreneur, for example Bill Gates of Microsoft or Richard Branson of Virgin.
Do you recognise them and their activities in the description of entrepreneurship given in this chapter?
6. Explain the nature and the significance of the terms added value, economic profits, and rent. How
does the added value approach suggest we judge business performance? Does this seem sensible to you?
7. Evaluate the view that successful high street retailers such as Marks ans Spencer are successful because they were lucky enough to have acquired the best high street locations before their value was really appreciated.
8. Is it appropriate to assume that the objective of the enterprise is generally the same as the objective of the entrepreneur, or the owner of the enterprise surplus?
9. ‘The Prisoner’s Dilemma is an interesting story but it isn’t very realistic?’ Discuss.
10. What factors ultimately determine the objectives of the enterprise?
11. Is the value or profit maximising view of the purpose of enterprise too narrow, too finance oriented, for the analysis of business policy?