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Profit Maximization in Businesses Student’s Name Institution Introduction Profit maximization is merely the primary goal of most businesses across the globe. Such businesses tend to engage in practices that do not serve other business purposes other than making profits and facilitating continued business activities. Similarly, a business that only seeks to maximize its profits does not hold any obligation to other stakeholders such as its customers and the society the business is situated (Hörisch et al., 2014). Therefore, companies should not assume profit maximization as their only goal. The paper seeks to establish the reasons why profit maximization should not be the only business goal. Further, it provides the various consequences of focusing solely on profit maximization. The paper utilizes the stakeholder model to support arguments against profit maximization. The Stakeholder Vs Shareholder Models of Business The shareholder theory of business proposes that only the owners or shareholders of a business are the only essential part of a business. As a result, meeting the needs of business owners is considered the priority of business (Hörisch et al., 2014). In such cases, businesses are argued to have a responsibility to earn profits and add value to the business. The stakeholder model, on the other hand, argues that a business cannot focus on meeting the needs of shareholders without taking into consideration the stakeholders who contribute towards the success of the business. In such context, the needs, as well as requirements of the government, suppliers, customers, employees, the community, and trade associations, should be considered during business
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