As a goal "profit maximization" alone is too simple to be meaningful.
All goals are filtered by our values. If someone is driven by greed alone then ethics may not be considered. However, that person will still need to consider timescale. If you take the short-term view a manager may put off maintenance on a machine so that it can continue to produce but not have the expense of the maintenance. Thereby increasing profit in that accounting period. But what if doing so causes irreparable damage to the machine that means it will eventually have to be replaced several years earlier than necessary. In the long-term the company's profit is reduced even though it was maximized in the short-term.
So even someone who does not value ethical behavior should modify their idea of what the "maximum" acceptable profit is in the short-term giving due consideration to the long-term.
When someone's values mean that they bring ethical behavior into the equation you need to plan for the cost of behaving differently. This means that the maximum profit achievable from acting ethically will often in the short-term be lower than from acting unethically. However, in the long-term the profits may be higher.
Look at the way banks have behaved in the recent past. The search for maximum profits lead them to act unethically in lending to people who were never going to able to service the debt. A culture of high bonuses fueled this behavior and people never thought that the growth would end.
Shame on the bankers, regulators and politicians who believed that profit maximization, without any other considerations, was a good thing.
Ethical considerations mean taking into account the morality of an action before taking. This means a business looks not only at its profit margin but also at the effect of the action on its employees, customers, and the community.
WHAT IS THE PROFIT MAXIMISATION?
If the company is public listed (trades in the stock market) their aim is shareholder wealth maximization whereas for a privately owned firm a profit maximization objective is appropriate.
it is operating cost
Resources is a factor in profit maximization. A company has to have all of their necessary resources in place to ensure they can maximize their profits each day.
The objective of profit maximization is to increase a company's earnings to the highest possible level within a specific period. This goal drives businesses to optimize their operations, reduce costs, and enhance revenue through effective pricing and marketing strategies. Ultimately, maximizing profit not only benefits shareholders but also enables reinvestment into the company for growth and innovation. However, it’s important for firms to balance profit maximization with ethical considerations and long-term sustainability.
Under what conditions might profit maximization not lead to stock price maximization?"
Not necessarily
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Profit maximization increase the graph of outputs.
Profit maximization can be both good or bad. Done correctly, profit maximization helps the company provide great products and services for customers.
sales maximization technique is generally used in scale industries where base of the expenses is largelly fixed and where variable costs are limited. on the other hand profit maximization technique are used by variety of industries. total output is higher in sales maximization as compared to profit maximization
None
Ethical considerations mean taking into account the morality of an action before taking. This means a business looks not only at its profit margin but also at the effect of the action on its employees, customers, and the community.
discount rate
Shareholder wealth maximization is considered to be a more appropriate goal for the firm than profit maximization
While profit maximization is an important objective for firms, it should not be seen as the only legitimate pricing goal. Other factors, such as market competition, customer satisfaction, brand loyalty, and ethical considerations, also play crucial roles in long-term success. Balancing profit with these elements can lead to sustainable growth and a positive reputation in the marketplace. Therefore, a more holistic approach to pricing can ultimately benefit both the firm and its customers.