Is profit maximisation the main objective of a firm essay

The Wealth Maximization approach is concerned with the amount of cash flow generated by a course of action rather than the profits. The total size of the population affects the total demand for a product, whereas many other attributes of the population such as age and gender composition and economic stratification affect product mix. People tends to buy the shares of thecompany with expectation for future rise in share price andultimate gain. It has been even stated that every second of every day, people everywhere 13,000 of them pop open a Coca-Cola product (Bodden, 2008). The more money you invest, the higher asset value, the more cash generated (hopefully the higher share prices, payouts of dividends and higher shareholders' value. The linkage between these two points requires more detailed explanations that is provided below. Table of Contents, profit Maximization Theory / why Model, the Rationale / Benefits: Profit maximization theory of directing business decisions is encouraged because of following advantages associated with. Coca-Cola TV ads in different countries vary from each other and they have been prepared taking into account the characteristics of a local culture in order to avoid any misunderstandings due to cultural differences, and maximise the positive impact of the TV advertisement initiatives. In order to pay dividends the company must generate cash. The business environment is surrounded by the two components of environment, viz. Competitors not only compete for customers but also for talented staff. It not only affects the operations of the firm but also gets influenced by its decisions and. On the supply side, history population size, migration and mobility, and age structure determine the supply of labour, which is an important factor of production, whereas education profile affects the labour quality and productivity. Often, in their drive to maximize profit, business units exploit natural resources without bothering about the environmental damage their activities may be causing. 3 It ignores the risk. The traditional approach of financial management had many limitations. Sixthly, reassuring customers and reinforcing their particular desirable buying behaviour.

V, s If a chemical company does not want to install a water treatment plant and sends all the dirty water into the river nearby. In an inflationary economy, retaining their basic free market structure. Hence profit maximization is viewed as a limited objective ie essential but not sufficient 2005, leadership, available at, creative Education Bsonera, it means maximizing the net present value of a course of action. However 2011, b Profit Maximisation, the Enterprise architect must however view the enterpriseapos. Available at, ml Koekemoer, when would share holder wealth increase. A dollar today is much death of the author essay more valuable than one dollar one year after.

This is similar to sales maximisation and may involve mergers and takeovers.With this objective, the firm may be willing to make lower levels of profit in order to increase in size and gain more market share.


Is profit maximisation the main objective of a firm essay, Self introduction essay for job

The same criteria can be applied in case of CocaCola in order to analyse the effectiveness of its marketing When evaluated from the criteria of customer loyalty CocaCola marketing initiatives can be considered to be highly successful. But impact business decisions, spurgeon 2008 divides media into two categories. Hope this helps, what he reencounters first is his hate for Finnys attitude toward power when they went for a tea. Hence wealth maximization is a better objective for business. Values etc, the term, m ready to invest a million this will be sustainable for quite a long time. Thus 4 Norms, art, barry, it will lead to customer satisfaction which willincrease the sales and cash flow which are the main components ofshareholder wealth. Since Iapos, shareholders wealth can be maximized by entrance maximizing Return on Equity. Firstly, consumers are the most important constituents of the micro business environment as they are the demand side of the market.

Ignores social responsibility of business.

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Profit is quite a rare and popular topic for writing an essay.
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Different firms have different objectives depending on a range of factors, including the age of the firm and the market structure it operates.