The main challenge of establishing the goal of the firm is that:
A)Flexibility of accounting rules allow different firms to measure profit in different ways
B)Each firm has different set of stakeholders,hence will define stakeholder value differently
C)Each enterprise has a distinct business purpose
D)The goal of the firm is not directly observable

Question

Quizplus · Accepted Answer

Each enterprise has a distinct business purpose, which means the goal of the firm may vary from one organization to another. There is no one-size-fits-all answer to what the goal of the firm should be. The goal of the firm depends on various factors, such as the industry, market conditions, competitive landscape, management philosophy, and ownership structure. Therefore, managers need to carefully evaluate their firm's mission, vision, and values to determine the most appropriate goal for their company.

The Main Challenge of Establishing the Goal of the Firm