Profit maximization questions x 2 - Essay Example

Therefore, the answer is, to strike a balance between the two, that is, to not run after the profits to the extent that morality and values come at stake. As corporations it is imperative for us to hold our businesses in a manner that our personal values, which, in the first place should not be against that of the company, are aligned with what the society expects from us. A Business carries a two fold mandate, to earn profits and to seek to justify the means of doing so. Corporate Behavior should be governed by business ethics and values and at the same time describe certain methods to induce profit maximization.

Being a part of the top level management as executive I will seek to define moral and ethical guidelines in which to undertake the business, making it a part of my organizational behavior. The very culture needs to be such that it helps promote values and business ethic. It’s certainly undesirable to have cost cutting at the expense of low quality and sub standard products as in a way it may bring in short term profitability and increase shareholder wealth but in the long term it will lead to degradation of the company’s image.

I would try to take measures and communicate throughout the organization to promote moral values and to not give in at the mere expense of profitability. However, this does not mean that the pursuit of profitability is of secondary value. As I stated earlier the key is to strike a balance between the two. I believe seeking profitability on the lines of personal values and beliefs will actually act as a catalyst and exponentially create wealth for the stake holders through better image amongst them.

There is absolutely no point in running a business that violates personal values as it shatters the very being and makes him a slave of profitability. Once that violation is made the person has no moral obligation and can go to any extent to achieve the latter objective. Hostile take over’s, industrial espionage or even violating the rights of customers and suppliers may lead to some sort of profitability, but this type of corporate manslaughter is certainly questionable. Having a definitive framework in which to carry out the business would certainly be my initial responsibility and in order to see if its being followed, as most of the time there is a disconnection between the company's code of ethics and the company's actual practices, a corporate Value appraisal system should be in place to keep a check and balance. Ans.2 If we analyze the net profitability after tax the company has had around 11% profitability each year whereas the market moved 13% up in the initial two years and the difference between the last two years is about 8.8%. These numbers suggest that the company is performing in a somewhat similar manner as the market.

Now, if the company holds a leading position in the industry and has been having a smooth run of profitability and yet the share price has remained constant, it is certainly a message for the company that something is certainly wrong. The share price explains the sentiments of its investors about that particular company, if they believe that the company will do well, the share price will show a bullish trend but if otherwise, the stock price will go down. Now the company needs to understand and analyze its competitive position in the market.

It should seek to evaluate how the consumer perception has changed about the company. Having known that the share value of the competitors has grown, this is a