"The primary objective of all firms is the pursuit of maximum profit" discuss.?
Answer:
While there are different types of firms, the "shareholders", whether it is 100,000 collective investors or a single 45 yr old guy, the goal is to maximize profit.
Period.
If we look at the large firm, there tend to be overhead costs to changing price (if you are Outback, you have to pay for new menus, etc). There are many, many pitfalls that overhead fills in.
If we look at the small firm, the owner (if he runs the business) may be more flexible and negotiable on price.
He does this not out of the goodness of his heart (unless the customer is his mother), but because he wants repeat business, and it means more to his bottom line because small businesses naturally have less customers.
Whether it is "nice" or not, businesses respond to incentives, and if you're trying to target a specific policy initiative (i.e. pollution reduction) one needs to keep this in mind....99% of business owners won't do it out of the goodness of their heart.
There are obviously exceptions, they are called "soon to be out of business."
Oh boy another college assignment. Cant you people do some research on the net and do this stuff?
For:
It seems I can not think of anything to support this right now
Against:
The primary purpose is to meet a need. If no need is met, then nobody will purchase the firms goods or services, and hence there will be no profit.
Sometimes that need is maximizing profit - eg. brokerages - sometimes it is something else.
Also, Maximum profit needs to be defined in terms of time. The maximum profit that a firm can earn in 1 year is very different to profit they will earn if they are looking to maximize their earnings over 100 years.
For : The bigger your profit, the bigger your chances to expand your company, improve your employees welfare and improve your tax contribution to the country.
Against : Maximum profit could be tending to go to a hit and run business.Be carefull with the limit of your "maximum" profit.
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