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The final step in the metrics is to measure the financial benefits that are accruing to the firm because of the Six Sigma project being undertaken. This is important and is also an area of concern. Most criticisms of Six Sigma say that the benefits that are presented in such analysis are incorrect and actually […]
Group Behavior – In Organizational Context
In an organizational context, groupthink and group behavior are important concepts as they determine the cohesiveness and coherence of the organizational culture and organizational communication. For instance, unless the HRD function communicates the policies clearly and cogently, the employees would not participate and comply with them wholeheartedly. Hence, molding group behavior is important for organizations. […]
Vision of Leaders has to be Actualized by Middle Management for Organizational Success
Visionary Leaders and the Legacy they Leave Behind Leadership development is a process that encompasses all levels of the organizational hierarchy and ranges from identifying potential leaders, nurturing and mentoring them, and picking those among this pool to succeed the retiring leaders. Business leaders in the 21st century need to have vision and mission as […]
Objectives of Conducting a Group Discussion
Why is a Group Discussion Organized ? In the previous article, we talked about what is group discussion, the basics and how is it different from a debate. In this article we are going to cover a number of subjects including why a Group discussion is being conducted, the areas of evaluation during a selection […]
Employee Etiquette – Codes of Conduct necessary for an Individual at Work
Etiquette refers to good manners required by an individual to find a place in the society and gain respect and appreciation from others. Individuals working in organizations to earn a living for themselves are called employees. It pays to be a little mature and sensible at the workplace. Avoid being too casual. Employee Etiquette Employee […]
Many economists have argued that profit maximization has brought about many disparities among consumers and manufacturers. In case of perfect competition it may appear as a legitimate and a reward for efforts but in case of imperfect competition a firm’s prime objective should not be profit maximization.
In olden times when there was not too much of competition selling and manufacturing goods were primarily for mutual benefit. Manufacturers didn’t produce to earn profits rather produced for mutual benefit and social welfare.
The aim of the single producer was to retain his position in the market and sustain growth, thereby earning some profit which would help him in maintaining his position. On the other hand in today’s time the production system is dominant by two tier system of ownership and management.
Ownership aims at maximizing profit and management aims at managing the system of production thereby indirectly increasing the income of the business.
These services are used by customers who in turn are forced to pay a higher price due to formation of cartels and monopoly. Not only have the customers suffered but also the employees.
Employees are forced to work more than their capacity. they is made to pay in extra hours so that production can increase.
Many times manufacturers tend to produce goods which are of no use to the society and create an artificial demand for the product by rigorous marketing and advertising.
They tend to make the product so tempting by packaging and labeling that its difficult for the consumer to resist. These happen mainly with products which aim to target kids and teenagers. Ad commercials and print ads tend to provide with wrong information to artificially hike the expectation of the product.
In case of oligopoly where the nature of the product is more or less same exploit the customer to the max. Since they form cartels and manipulate prices by giving very less flexibility to the consumer to negotiate or choose from the products available.
In such a scenario it is the consumer who becomes prey of these activities. Profit maximization motive is continuously aiming at increasing the firm’s revenue and is concentrating less on the social welfare.
Government plays a very important role in curbing this practice of charging extraordinary high prices at the cost of service or product.
In fact a market which experiences a high degree of competition is likely to exploit the customer in the name of profit maximization, and on the other hand where the production of a particular product or service is limited there is a possibility to charge higher prices is greater. There are few things which need a greater clarification as far as maximization of profit is concerned
Profit maximization objective is a little vague in terms of returns achieved by a firm in different time period. The time value of money is often ignored when measuring profit.
It leads to uncertainty of returns. Two firms which use same technology and same factors of production may eventually earn different returns. It is due to the profit margin. It may not be legitimate if seen from a different stand point.
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