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Definition:
An alternative theory to that which argues that firms seek to maximize profits. W.J. Baumol (Economic Theory and Operations Analysis, 1965) is generally recognized as having first suggested that firms often seek to maximize the money value of their sales, i.e. their sales revenue, subject to a constraint that their profits do not fall short of some minimum level which is just on the borderline of acceptability. In other words, so long as profits are at a satisfactory level, management will devote the bulk of its energy and efforts to the expansion of sales. Such a goal may be explained perhaps by the businessman's desire to maintain his competitive position, which is partly dependent on the sheer size of his enterprise, or it may be a matter of the interested management, since management's salaries may be related more closely to the size of the firm's operation than to its profits, or it may simply be a matter of prestige. It is also Baumol's view that short-run revenue maximization may be consistent with long-run profit maximization, and revenue maximization can be regarded as a long-run goal in many oligopolistic firms. Baumol also reasons that high sales attract customers to the popular product, cause banks to be receptive to the firm's financial needs, encourage distributors, and make it easier to retain and attract good employees.
What else can I help you with?
Definition of sales executive?
Executive who maximize the sales of the organization where he is working with
What is the definition of Sales Realization?
The definition of sales realization is the conversion of goods, services, and assets into cash. These things are sold to receive cash or other goods.
What are the objectives of a modern business firm?
Profit maximization sales maximisation growth maximisation utility maximisation satisfying behavior long run survival welfare objectives
Definition of a sales adviser?
A sales advisor is a 'shop assistant that helps out and works more with the customers and answer any questions they might have.
Definition of sales and marketing?
Sales is an exchange of object for money Marketing has broader meaning which involve in packaging and selling products
Sales maximization vs profit maximization?
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
What is the Difference between profit maximization and sale maximization?
The key difference between profit maximization and sales maximization focuses on the handling of costs/expenses. Sales maximization is a topline income statement action that attempts to maximize sales revenues. Sales maximization techniques are used in scale industries where the expense base is largely fixed and there are limited variable costs associated with acquiring the next dollar of sales. Profit maximization is a multiline income statement action that attempts to both maximize sales (as represented above) while minimizing expenses in order to maximize effective margin. Profit maximization techniques are used across a variety of industries.
What is the meaning of sales maximization?
i don t know
Explain baumol's sales maximization theory.?
maximising sales and it is where AC=AR..this the point where the maximum amout of sales take place. The firm only makes a normal profit at this stage.
What is sales maximization model?
Term sales maximization Definition: The notion that business firms (especially those operating in the real world) are primarily motivated by the desire to achieve the greatest possible level of sales, rather than profit maximization. On a day-to-day basis, most real world firms probably do try to maximize sales rather than profit. For firms operating in relatively competitive markets, facing relative fixed prices, and relatively constant average cost, then increasing sales is bound to increase profits, too. Moreover, according to the notion of natural selection, even firms that seek to maximize sales, those that also maximize profit will remain in business.
What are the criticism baumol's sales maximisation model?
Criticism of Baumol's sales maximization model includes the assumption of profit maximization as the main goal of firms, the lack of consideration for other objectives like shareholder wealth maximization, and the oversimplification of managerial behavior by focusing solely on sales revenue. Additionally, critics argue that the model does not account for dynamic market conditions and competitive strategies that firms may adopt.
How does advertising helps in sales maximization?
advertises are main base of the sales,,,,,,,, becs then oly people came to know dat about the product
What is Three basic reasons is profit maximization inconsistent with wealth maximization?
Profit maximization is a narrow view which accounts for only the difference between sales and costs Wealth Maximization is broader and more philosophical in approach. Wealth maximisation includes not exhaustively culture , synergy, value, potential and wealth
What is the definition of rio?
whats the definition of riop
What is the definition of guadrillon?
whats the definition for guadrillion
Why is wealth maximization a better operating goal than maximization sale?
The wealth maximization increases the net value that is current. The maximization sale involves obtaining the highest amount of sales without incurring any loses. Each, especially when used together, can be the better operating goal depending on the situation in which they are needed to be used.
Why we do prefer shareholder wealth maximization rather than maximization sales?
Shareholder wealth maximization is preferred over sales maximization because it aligns business objectives with the long-term interests of shareholders, ensuring that decisions are made to increase the overall value of the company. Focusing solely on sales can lead to short-term gains at the expense of profitability and sustainable growth, potentially jeopardizing the company's financial health. Ultimately, maximizing shareholder wealth encourages efficient resource allocation, strategic investment, and risk management, which are essential for enduring business success.
