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Among the multiplicity of objectives that a modern firm has profit maximization continues to be the most important Comment?
Wiki User
∙ 12y ago
The success or failure of a firm is measured in terms of the amount of profit it is able to earn in a competitive market. Under profit management, one has to study various theories of profit, emergence of profit, functions of profit and its measurement, etc.
Thoeries underlying the Objective of a Firm, mainly talk about the subject of Ethics in Business. Debate is going on since a long time, as to whether every Firm's Objective needs to be ETHICAL? the answer may seem as simple as "YES", but the counter arguements that follow are difficult to answer.
Coming to Profit Maximization, the question goes as to whether Profit Maximization Goal is justitfied? In a private enterprise, no one can have control over Profit maximization. If the profits are made with the use of Society's resources, such profits need to be sowed back for Societal Development.
The profit-maximization rule applies both to firms that are able to sell their product at a constant price and to firms that find they must reduce the price of their product to increase sales. In the real world, firms have to engage in trial-and-error discovery processes, searching for the profit-maximization point. But the process can be succinctly described by the marginal revenue-marginal cost rule.
Profit is what is left over from a business after the bills are paid. without profit the company can not afford to re-invest in capital or have money to pay stockholders. I think Customer satisfaction if the basic motive and objective of firm. When we will more and more consider to satisfy customer needs and wants, automatically our secondary objective "profit maximization" will be achieved.
Wiki User
∙ 12y ago
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Why are business objectives important?
Business objectives is very important to a business because the business needs to create financial, operational, social and environmental goals to acheive. By setting objectives you know where the busines is heading and how its going to have a competitve advantage in the mass market.
Why growth may not be the important objective of the business?
Before growth there are most important objectives for a business, first at all to make profits maximisation, business survival.So to be survived on the market,it will have to lower its prices of the products even though it will have a lower profits.
Objectives and importance of management audit?
In today business world management play very important role for the success of failure of business. Management is the life blood of every organization. So if organization want to gain competitive advantage then it should improve their management efficiency and effectiveness. Followings are the objectives of management audit: Review of policies review of procedures review of methods performance appraisal job rotation Depend upon auditor mind or purpose of management audit
In what ways is wealth maximization objective superior to the profit maximization objective?
Wealth maximation aims in maximising Shareholders wealth, employees wealth, profiting the external and internal parties of the firm, vendors, vendees, customers, investors, employers and all the parties interested in the benefit of the company. Wealth maximation results in increased goodwill, branding and reputation of the company. Where as profit maximation only deals with increased profits. Wealth maximation is a wider concept
What are the objectives of public sector?
1.Ensure the essential goods and services are available for everyone equally; 2.Provide the goods and services that are too important for the security of the country; 3.Provide goods and services that cannot be provided by the private sector.
Why are objectives important to an organization?
Objectives are important to an organization because it gives everyone a sense of direction, and what their working towards.
Why are smart objectives important?
it is important to know how you are going to end
Why are aims and objectives important to a business?
Aims and objectives are important to a business because it gives them a 'sense of direction'- in other words, it shows a business what its goals are and what the business wants to do. There are different types of objectives businesses have and range from corporate objectives that focus on what the business wants to achieve as a whole. Financial objectives that show a business what financial position a firm aims to be in. Other objectives include marketing objectives and HR objectives.
Why is it important to be able to show team members how personal work objectives contribute to achievement of team objectives?
It is important so that they can stay on track knowing what the outcome is going to be
Is a bachelor's degree important?
It is important if your overall career goals and objectives require, or can benefit from it.
Discuss the importance of research objectives?
Research objectives are important in that they give the researcher an idea as to what he or she hopes to discover through research.
Why are business objectives important?
Business objectives is very important to a business because the business needs to create financial, operational, social and environmental goals to acheive. By setting objectives you know where the busines is heading and how its going to have a competitve advantage in the mass market.
Why are the aims and objectives of oxfam important?
Arenal r the best
Why is it important to set smart objectives?
Because it is important to have the end in mind before starting on a task.
What is the concept of maximization of shareholder wealth Why is wealth maximization better than profit maximization Wealth maximization?
The concept of maximizing share holder wealth is a goal that encompasses everything that is expected out of a management. when would share holder wealth increase? Either by dividends or by increase in value of the shares. When can a company declare dividends or when would a company's share value increase? when its profits increase, its net sales and revenue increase etc. so indirectly by trying to achieve one goal we are attaining some other goals that are very important for a company's existence.
What are the important objectives of mental health in a school?
to keep people sane
What are the primary objectives of corporate management in India?
The major objective of corporate finance by Indian corporate are are summarized as follows; Ø The two most important objectives of management decision making in corporate finance in India are; (a) maximization of earnings before interest and tax (EBIT) and earnings per share (EPS) (85 percent) and (b) maximization of the spread between return on assets (ROA) and weighted average cost of capital (WACC), that is, economic value added (EVA) (76 percent). Ø Large firms (on the basis of sales, assets and market capitalization), high growth firms and firms with high exports significantly focus on maximizing EVA than small, low growth and low exports firms respectively. Ø There is no significant difference in the EVA as a corporate finance objective followed by the firms in public and private sectors. Ø The spread between cash flow return on investment (CFROI) and the WACC, that is, cash value added (CVA) is the third most important objective (54 percent) of corporate finance management for large firms based on market capitalization. Ø Yet another important objective is the maximization of market capitalization. The MVA (market value added) objective is more likely to be followed by public sector units than by private sector firms. Ø The overwhelming majority of corporates (70 percent) consider maximizing percent return on investment in assets as the most important. Ø Another preferred goal is desired growth rate in EPS/maximizes aggregate earnings. Ø Wealth maximization/maximization of share prices is the least preferred goal of the sample corporates. Sanjay Swami
