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Maximisation of profit - Article Example

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An organization can be viewed as a consortium of like-minded people who come together to achieve a common objective. Objective here could imply anything, from garnering profits to creating social awareness or something else, which that group could feel that would make a difference in their internal and external environment…
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Maximisation of profit
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Download file to see previous pages When small groups of people come together and work on a project, they invariably have to analyze as to what their mission and goal are. Organizations are usually classifies into different types like public sector (Central governments, state government run offices, schools, colleges, public welfare systems), private sectors (small business partnerships, limited companies, cooperatives, multinationals etc.), Quasi-Governmental organizations, Organizations in the charitable sector and even the churches and trade unions can be referred to as organizations. (N.Kumar, 1997) Hence, every organization issues a mission statement, which includes the purpose of setting up the organization. In social sciences, organizations are perceived from different dimensions. The general study of how an organization works is termed as organizational behavior or analysis. The whole of organization's behavior revolves only around one aspect-its goal. Every organization should have, irrespective of the field it operates in, a distinct goal. (N.Kumar, 1997)
A goal, not only gives them a direction of persuasion, but also gives the much required motivation to the employees to work towards it, thereby helping them achieve their potential along with the company's growth. Likewise, a conceived state of an organization in a stipulated amount of time is referred to as 'Vision'. 'Vision' is extremely crucial for an organization as it gives a glimpse of the state of the organization after a certain period of time to the employees and stakeholders. 'Vision' can be taken as a benchmark for the company's performance in the future and can be used for comparison of various results recorded by the company. (Davenport Hines, 1990)
Private-owned organizations usually have profit-maximization as their sole objective. (Susan Grant, 2000)

However, many economists have different views over how an organization's objective should be formulated. Different people have come up with different theories over the issue of organizational objective. Many of them clashed, many of them overlapped and new theories were born out of the overlapping theories, but a general consensus is achieved that profit-maximization should be the sole objective organization though other objectives cannot be safely put aside. In this dissertation, I'd like to analyze the various theories put forward by economists and then draw a suitable conclusion from the same. I will also be studying a few patterns of various industries by taking certain specific examples of how a few companies overcame different situations keeping in their minds profit-maximization as their sole-objective.

Literature Review
As said above, it is imperative for an organization to identify its objectives before venturing and investing resources into the venture. So what is/are the goals a financial manager in a company will seek. In the first impulse, the only objective, which comes to, the mind, is profit maximization. Any business enterprise aims at earning profits; hence, it may be argued that profit maximization should be the sole objective of the organization. It is needless to say, that earning profits sustains the company's existence and can motivate the company to expand its market and ...Download file to see next pagesRead More
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