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Profit Maximization cannot be the sole objective of a Business Firm

    A truely successful business can be built only if the objective of service to the society is constantly followed. If this is done profits will come automatically, but if the whole emphasis is on making money business may not survive and succeed for a long period.

 Profit canont be the sole objective of business due to the following reasons:
  1. Profit helps to serve the interest of shareholders alone. But business also has obligations towards  other stakeholders such as employees, customers, Government, society, etc.
  2. The ultimate aim of business should be social welfare. If profit maximization  is considered  as the ultimate aim of business, businessmen might try to maximize profits by socially undesirable means such as black marketing, hoarding, exploitation of workers and consumers, etc.
  3. Profit maximisation misguides managers to the point where they may endanger the survival of the business. In order to maximize current profits, managers may compromise the firm's future. they may ignore research and development, executive development, pushing the most easily saleable products, and other long-term investments.
  4. Profit maximization is inconsistent  with modern trends in business. Diffusion, of share ownership, professionalisation of management, growing social consciouness, etc. are some of these trends. 
             Thus, Every business should provide a proper balance between profit motive and social service.
       
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Comments

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  2. RahulJuly 7, 2020 at 12:24 PM

    Amazing content

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  3. Luna BakerJuly 7, 2020 at 12:44 PM

    True profit maxima is not everything

    ReplyDelete
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  5. Deepa NamdeoJuly 7, 2020 at 8:31 PM

    Nice article

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