Profit maximization is management objective?


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Profit

There is a thinking that the main objective of management is to maximize profits by  maximizing profits at the cost of customer and even by minimizing cost. But its a myth like there is a myth that if you go in MBA then only there is better future but life does not end here. Life has some or the other thing which it has thought about it.

Maximizing shareholder wealth and maximizing profit goes hand in hand. A firm maximizes shareholder wealth by investing in projects that will increase profits and the cash flows of the firm, finding ways to prudently cut the variable and fixed operating cost and creating product that will increase revenues. The firm’s executive must also manage the company and its operations in a fiscally responsible manner in order to increase the profitability of the company. By taking  these steps the firm therefore increases the shares of its stocks which increases shareholder wealth. Therefore the objective is to maximize wealth and not maximize profits..this was the financial theory..that’s why even the objective of management was earlier to maximize profits but now it has changed to maximize wealth which is a broader perspective and which is helping the customer and even the shareholders to earn money

Thankyou

Sayonara!
I m not a has-been I m a will-be


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dhara

I am Dhara Shah, a BMS graduate, a friendly person with a happy go lucky nature but cannot stand by lies in front of me, sometimes stubborn as well. I am fun loving kinda person and talkative too.

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