Profit Maximization - Essay Example

?Profit Maximization: An Actual or Theoretical Objective? Business regimes in the present times are geared to achieve the maximum profits that they can earn within the shortest possible time. This is because profit is a much desired proposition, more than any other entity within the business realms. It is an objective that is there for the long term. It is a fact that every organization strives to earn a profit though at the expense of a number of activities and tasks that it does. What this implies is the fact that profit shall be the cornerstone of achieving success though this is not discussed at length by the organizational top heads. Business should in essence earn profits for its own good. This statement holds true for the business as a whole but the manner in which he has explained the statement suggests that business has to do a lot of social service work apart from the usual profit earning exercises that it usually undertakes on a consistent basis. Because of this, the aspect of Corporate Social Responsibility (CSR) has come about to the fold. This phenomenon is internal to an organization; as it dictates the manner in which it has to plan about the courses of action it has to carry out with respect to the society. This term basically deals with the organization’s set of operations that it carries out for the welfare of the society while existing within itself. However bringing in profits remains a significant aspect no matter what the ethical domains turn out to be. This is a reality and shall remain to be in the long range scheme of things. Moving on further with the discussion at hand regarding the responsibility of business units, we see that these concepts can be applied to a business in a very innovative fashion as well. The company can invest in the social arena with much return in mind, not in the short-term but of course in the long run. Such is the example of Shell, which has introduced education programs for children all over the globe thus acting as a consumer-friendly company. People in return like to buy products of Shell because it gives them the pleasure that some proportion of the money earned by Shell would be spent on its different social and literary programs. Culturally, this can prove to be a very vital agent that can really highlight the problem areas of different people within a particular environment and then go about correcting and reforming them in the best manner possible with the aid of funds and grants1. This is the basic way in which the business has been acting to do something for the sake of community welfare. The companies from the economic aspects can earn a due share with arranging all sorts of cultural activities in the name of charity that will benefit their cause and help the poor and needy. Speaking truly from an ethical viewpoint, it is the duty of any business that exists to satisfy a customer through its products and/or services to be responsive towards their needs and defer the financial sides concerned with the company. It is important though not to ignore the monetary aspect but to remain in the business in the first place for the ones the business is being done, it is essential to situate the resources onto them and then move on forward expanding the market share and the like. There are a number of companies that have continued to divest the consumers of their basic rights in the name of achieving certain financial ratios. However doing so does mean putting the business’ long term strategy at risk as the customers and the remaining stakeholders would not appreciate the fact that the enterprise does not value their concerns rather goes after the financial side. The need and thus the opportunity in the business world of present times is to get ourselves noticed and make the companies realize of their responsibilities that they owe to the customers. It is imperative on the part of the respective company’s leadership to understand that customers alone could shape up the future and visionary characteristics of the company and thus they have to be focused very precisely. Ignoring them even for a moment could be hazardous to the prospects of a business concern. The business regimes of the current times need to be on their toes as far as provision of information and correct data is concerned. For this, there are specialized public relations departments set up within the organizations so that they could look at the reactive as well as the proactive side. The reactive side looks to solve the problems which arise in the aftermath of an event or a sudden situation which has caused uproar in the relevant circles while the proactive side is ever-vigilant and always on the move to remain abreast of the changing global business scenario. The need of the hour on the part of the business gurus is to discern that this statement paves the way for the effective and efficient working methodologies as far as complimenting a policy is concerned. Maximization of profits indeed helps a business sustain at the top level but it is with a sound reputation and rapport at the highest echelon that the organization keeps making a good name for itself at all possible areas2. The role of the business within the profit maximization drives is something that shall reap a good amount of success for the business enterprise because this actual objective would be more meaningful than any other aspect in the long run. This has been proven with the passage of time as well where the emphasis has rested with large corporations realizing that profit maximization would turn more heads in their favor than the other way around. Maximizing profit remains an actual objective more so because it helps solve quite a few problems on the part of the organization. This is true in the case of meetings held with the stakeholders where ideas for funding are shared and thus the way forward is discerned in essence. This helps the organization grow by leaps and bounds, and further lets it to develop its own basis within the long term. Thus the rationale is that the government must play its role in harnessing the skills attached with the corporate sector in finding out the better means in which it can benefit its own self. For this to happen, certain loans and grants can also be fixed for a certain company depending on its market level in the business world. Extensive research has found that profit maximization is becoming an essential part of any company’s day-to-day undertakings. Thus, the responsibility played by the government as well as its stakeholders in this regard should be quite eloquent and expressive. Their voice is given due value by the company and it does just about everything to get more and more customers and consumers which in turn excites it to search for better means to get the very same people. This, in turn, attracts the company to sponsor big events and sports galas, competitions as well as come towards social welfare works, which really benefits the society in more than one ways. For the small business owner, maximization of profit means a different thing altogether. He sees it in a different attitude encompassing his own business and its responsibilities fulfilled for the stakeholders, end consumers and the management realms. In the same context, profit maximization helps as a survival agent for any business in the new atmosphere of economy. By that it means whenever the economic climate changes, it favors the business that has been initiated by an organization with respect to its role in fulfillment of the financial responsibilities. This can be regarded as an advantage whereby the business gets a slight edge as opposed to the other ones in the corporate world who have not actually gotten started with the idea of investing with consideration to the financial angles in the forms of different sponsors, tax avenues and the like. The major disadvantage that profit maximization possesses within its fold is that it does not have any benefits within the short-term duration but hope can certainly be placed on the longer ones. This can be regarded as a short-term con, which can banish with the changing times of the business situation. The basic purpose of having any business is to earn a profit (or revenue); however this is not stated as the mission or vision statement of the organization ever. The organization strives to bring value to its customers, stakeholders and create an encouraging environment for the employees and workers3. Thus it is to suffice to suggest that profit maximization undertakings can really get the best out of business companies and industries. Moreover they can maximize their profits over a period of time by building goodwill and long lasting relationships with the stakeholders. The public versus private authority thus brings in the much needed dividends for one and all – the business enterprise, the stakeholders and the people who are a part of this very society. When the stakeholders find out that their market is in direct proportion to what they do within the business domains, they invest more and more which ultimately profits the business and their own selves in particular. Since profit maximization is an intense element within any organization, it is only natural to think of it as such. What this implies is the fact that profit maximization will supersede any action that has been taken by the management to bring in success within its own domains. This easily suggests the priorities of the management towards profit being a goal and an objective, all at the same time. The end goal of any sane management enterprise is profit maximization because it creates room for growth and development of the organization in the long run. It creates the mix of success and opportunity within the short term as well as in the long term. The organization is therefore reliant on the successful initiatives of the financial and economic sub-units which are playing their significant roles all this while. The role of the top management remains an entity that must be tapped with a lot of emphasis and clear cut focus. In essence, if they do not fulfill their responsibilities in a timely manner, there are bound to be serious ramifications for the entire management realms, and this is something that reduces the chance of making profits for the sake of the organization4. What must remain supreme is delivery of service; however profit maximization is also a reality that should be understood within the related settings. This is because the organization cannot lose sight of its long term objectives and end goals which it has envisaged for its own self in the coming times. In concluding remarks, it would be wise to suggest that business companies need to set their house in order. They must interact with the stakeholders so as to bring benefits for the public enterprise. Their profits are directly proportional to the way the public views their related business and the industry as a whole. Profits will nosedive if the general perception about a business is derogatory and when there are few friends within the whole business fraternity which exists. The aspect of selfless behavior needs to be exhibited and that too time and again. The idea of “giving” has to be invoked more than anything else. This is a perspective which will only exponentially increase the profit margins of any business over a period of time. The need of the hour is to realize where the business has gone wrong and what corrective steps need to be taken on war footings. All said and done, the relation of business with society is one that will continue to grow with the passage of time and one sees a number of new and novel ways and means to enter this domain of public versus private partnership in the days to come. Works Cited Ali, Abbas J. Profit Maximization and Capitalism. Advances in Competitiveness Research, Vol. 14, 2006 Lee, Ian B. Corporate Law, Profit Maximization, and the "responsible" Shareholder. Stanford Journal of Law, Business & Finance, Vol. 10, 2005 Smith Jr., Ronald S. Profit Centers in Industrial Ecology: The Business Executive's Approach to the Environment. Quorum Books, 1998 Truett, lila J. Joint Profit Maximization, Negotiation, and the Determinacy of Price in Bilateral Monopoly. Journal of Economic Education, Vol. 24, 1993 Read More