Value line publishing Essay Example for Free

Value line publishing Essay

Maximizing Profits as the Main Goal Essay -- Economics Business Manage

Maximizing Profits as the Main Goal The traditional theory (neoclassical) assumes that firm’s primary objective is to maximize profits. That is if the firm is owner controlled. This assumption is based on that firms makes the output and price decisions. Also, that firm takes all necessary actions to earn the greatest profit possible. The managerial theory assumes firms do not necessarily act in order to maximize profits. The basic tenet behind this is the separation of ownership from management, complexity of the organisation and the firm’s manager maximizes his own utility and growth rather than profits. The reason for this is that managers may be judged by the level of sales revenue. I will be providing supporting arguments for and against this assumption â€Å"that the firm’s main motivation is to maximise profits† and draw a conclusion by analysing the firms behaviour as well as further discussing the theories of firms. Profit maximising assumption is based on two premises, firstly that owner is in control of day-to-day management of the firm and secondly that the main desire of owners is to make a higher profit then the amount they invested in the firm. Since this assumption is based on two assumptions, therefore if these two premises don’t hold is it understandable to believe that firms goals is not to maximize profits. Well, this will depend on the motivation of individual firms. If a firm’s ownership and control are in the hands of a single person or small groups of people, then it’s reasonable to assume that the firm’s owners’ goal is to maximize profits. But most of today’s firms are owned by shareholders and other large cooperation, but day-to-day control of the firm is under management. Therefore, the objectives of managements may differ from the shareholders and conflicts may arise. â€Å"For example Baumal (1959) suggest that the manager-controlled firm is likely to have sales revenue maximization, as its main goal than profit maximization favoured by shareholders† (Applied Economics 7th ed. p54). Also, studies of 177 firms between 1985 and 1990 by Conyon and Gregg (1994) found that the pay of top executive of large firms in UK was mostly related to sales growth. Other studies have found that profit was the most important determinant of executive income. For example â€Å"A survey by Management Today in 1990 asse... ..., argued that regardless of how actual firms may behave and constraints on rationality they may be subject to, the surviving firms are those who attained high profits. Due to the strength of these arguments, we tend to accept profits maximization theories are justifiable. Bibliography Alchian, A (1950), â€Å"Uncertaintity. Evolution, and Economic Theory†, Journal Of Political Economy. 58(3), 211-221. Buzzel, R, & Gale, B. (1987). The PIMPS Priciples, Strategic Planning Insitute. Conyon, M & Gregg, P. (1994). Pay at the top: a study of the sensitivity of top director remuneration to company specific shocks, National Institute Economic Review, August. Friedman, Milton (1953), Essay in Positive Economics, Chicago: Chicago University Press. Griffith, Alan & Wall, Stuart (1997). Applied Economics: An Introductory Course. 7th Ed. Lipsey & Chrystal (1999). Priciples of Economics. 9th Ed. Marris, R. (1964) The Economic Theory of Managerial Italism, Macmillan. Sloman, J (2003).†Economics†. Prentice Hall. 5th ed William, K. â€Å"Objectives†. Can be found on: http://william-king.www.drexel.edu/top/prin/txt/MPch/firm2.html. Accessed 4th of February 2005.

D.A.R.E. Report Essay

While participating with D.A.R.E., I learned that drugs and alcohol are not good for you. I also learned that tobacco and alcohol and any other drug can hurt different parts of your body. Marijuana causes breathing problems, short term memory loss, slows coordination and reflexes, and effects ones ability to judge distance, speed and reaction time. Marijuana can become addictive and is illegal in the United States. Smoking tobacco has over 200 unknown poisons in the smoke, and contains nicotine which is very addictive. By not doing drugs is important because if you do drugs you will hurt your body. It is also important because sometimes you have to have surgery and in some cases you can die. Smoking and drugs can hurt a newborn baby. Alcohol slows down the brain and body and causes loss of coordination, poor judgment and loss of self-control, which could lead to serious accidents involving a car and someone innocent can be injured. I feel that everybody should not do drugs. Everyone always have to make wise decisions about what you do with drugs and alcohol. As a participant in D.A.R.E., I will not participate in or associate myself with anyone that is involved in drugs. I will follow all five D.A.R.E. rules and remain a respectable citizen.

Business Law Moral Minimum - 1382 Words

The Moral Minimum: A Complex Standard Each person has a set of personal values and morals that they hold themselves accountable to, whether for religious reasons or the result of years of environmental conditioning. These standards of behavior often go above and beyond the laws set in place by government. Just like individuals, a business entity chooses a standard of moral behavior to uphold. A difficult task to undertake, considering businesses are comprised of people with varying behavioral standards, but a necessary one nonetheless. Businesses are required to act with a moral minimum, defined as the minimum degree of ethical behavior expected of a business, or more specifically, compliance with the law . Most businesses go above this†¦show more content†¦It goes beyond that of the moral minimum, rejecting certain moral norms and debating borderline â€Å"moral issues†, such as drinking or gambling. Despite the author’s book being based on criminal law and society’s dealings with deviant behavior, it sheds light on the framework for moral minimum in a business context. If a business’s behavior does not physically result in harm to anyone, but violates a higher moralShow MoreRelatedDifferent Perspectives On Corporate Social Responsibility959 Words   |  4 Pagespossible moral minimum for organisations. Define Friedmans and Freemans perspectives on (CSR). There are two major perspectives on Corporate Social Responsibility, Friedmans Classical Perspective and Freemans Stakeholder Perspective. Friedmans Classical Perspective refers to the perspective that the primary goal of business is to maximise the economic efficiency while continually acting within the boundaries of the law. This neglects the idea of ethical behaviour, and chooses to only use the law as theRead MoreMoral Responsibility797 Words   |  4 Pages(A) of the core moral responsibility This is done by P. 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Labor unions at the time tried a couple of times to get a minimum wageRead MoreFuture Consideration For Employer Based Health Insurance1628 Words   |  7 PagesEmployer-Based Coverage The ACA â€Å"makes health insurance more secure and reliable for Americans who have it, makes coverage more affordable for families and small business owners, and brings down skyrocketing healthcare costs that have put a strain on individuals, families, employers, and our Federal budget† (Obamacare Facts, n.d.) by the establishment of laws which govern how healthcare. 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