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An organisation earns profit but does not reinvest any part of its income to increase future capacity. Which managerial objective may remain weak?

Answer and explanation

Correct answer: Growth

Reinvestment of part of the profit is important for increasing future capacity, expanding operations and developing new facilities. Therefore, if no income is reinvested, the organisation’s objective of growth may remain weak. Profit earning is already taking place, and survival may continue, but neither automatically ensures growth. Exam tip: Distinguish clearly among survival, profit and growth as organisational objectives.

Related tags

Management ObjectivesGrowthReinvestmentOrganisational GoalsObjectives Of ManagementNature And Significance Of ManagementBusiness StudiesClass 12 Mcq

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