It shows that the country is progressing satisfactorily. The shareholders are like the foundation stones of the company. Some people feel that earning of profit should be the main objective of the business and others are against it because they feel that maximization of profit should be the sole objective of business enterprise. One of the roles of profit in business is that businessman retains and reinvests a part of its profits in business undertaking stands on sound footing. It is regarded as an index of business success. Profit is how you build something you can sell. A business objective, on the other hand, is a measurable step people take to achieve that goal. A business goal is vague in comparison.Whe… Profit is also necessary for the expansion and growth of business. The goal includes a broad primary outcome. Profitability objective may be stated in terms of profits, return on investment, or profit to-sales ratios. We can … Although, earning profit cannot be the only objective of business, its importance cannot be ignored. However, the business should not have the objective of maximization of profit because it leads to exploitation of the consumers. Infact profit making is the primary objective for which a business unit is brought into existence. Profit may be regarded as an essential objective of business for various reasons (a)It is a source of income for business persons. Every business is started to earn profits as it is essential for the survival and growth of business enterprises. Profit is essential at the time of attracting additional capital for undertaking expansion and modernization measures. Not really its the only objective of every business. If we increase our business our profit automatically increase.if our only aim is to earn then we can't do progress in business.our business will always there. Independent from its potential to drive growth and development. Infact profit is the oil which drives the wheels of business. Because of this reason the earning of profit occupies uppermost position in the minds of the businessmen. Great business profits is an indication from a society that the company is providing things that they want. PublishYourArticles.net is home of thousands of articles published by users like YOU. Profit is distinct from revenue. Profit, for any company, is the primary goal, and with a company that does not initially have investors or financing, profit may be the corporation’s only capital. The value of the business drops dramatically. It can be seen as the monetary reward to shareholders and owners of a business. Profit, therefore, is a reward for the future which is uncertain. It is the source of revenue to … where the businesswants to reach in the future. Profit Maximization Objective 2. Because it is the foremost factor in maximizing the wealth of the shareholders. 2. If there is no economic development there is no profit to the business. Earning profits on the capital employed is the main objective of every business enterprise. A business should earn profit but not to ignore: Is Earning the Sole Objective of Business, What is Strategy, Steps in Management by Objectives MBO, Functions of the French Constitutional Council, The provision of quality goods at reasonable prices to the consumers, Payment of all due taxes to the government treasury, Generating and offering good remuneration to its employees, Contributing to the general welfare of the society. Profit: The primary objective of every business is to earn profit. Also Read:  What is Business Entity Principle in Accounting. Before publishing your Articles on this site, please read the following pages: 1. A true vision for a business rests on foundations of both purpose and values. Maximum profit was achieved at the output at which marginal cost is equal marginal revenue. Profit is the total revenue from sales minus the total cost of resources employed by the entrepreneur. ADVERTISEMENTS: The following points highlight the four main objectives of business firm. Profit is the lifeblood of business, without which no business can survive in a competitive-market. Profits enable a businessman to stay in business by maintaining intact the wealth producing capacity of its resources. Most people go into business for some benefit or value creation. Profit acts as an index of performance for business, if the business firms are earning profits. TOS4. Business needs objectives, without objectives the business is like a car without headlights driving blind. The business can be continued when there is a fair profit. It leads to a number of corrupt practices. That profit, in particular, is the ultimate goal of any business. For example, a business wants to set up its franchise in another state in the next 3 years or it wants to increase its workforce in the coming months. In fact profit making is the primary objective for which a business unit is brought into existence. 1. In all business undertakings in the private sector, the main motive is to earn profit. It's a prior or u can say most important objective of business. It also states how long it will take, and what resources are available. Profit is the reward for bringing new products or processes to the market. profit maximisation as the sole objective of a business firm.. And the answer may surprise you. Without profits, the business simply is not viable. (vi) Manager Performance and Development: All business enterprises need managers to conduct and coordinate business activity. II. Profit Maximization Objective: Profit as an objective has emerged from over a century of economic theory. Profit earning should be regarded as the main objective of business unit. 9 May 2017 by Tejvan Pettinger A business has a variety of potential objectives from profit maximisation to cultivating good relationships with various business stakeholders. If I ask the question, is earning the sole objective of business? You can lower prices or invest heavily to generate revenue, but if your costs are too high, you don't make profit. Business has many other objectives to accomplish. Every business tries to make profits for itself and its shareholders. As such the “Purpose of Business” became profit maximization. Profit is the measuring techniques to understand the business efficiency of the concern. The main objectives that a business might have are: Survival – a short term objective, probably for small business just starting out, or when a new firm enters the market or at a time of crisis. It is a reward for a risk successfully undertaken. Profits help businessmen not only to earn their living but also to expand their business activities by … Privacy Policy3. Disclaimer Copyright. The need of profit in business is left to cover the cost of production and also create a surplus for undertaking expansion and diversification work. The primary motive of the business is to earn profit because it provides stimulus to human efforts in undertaking business activities. It lowers the human values because the state of increased profit will lead to a materialistic society. A business does not have to make a profit if the business owner does not mind operating the business with funds from other sources and losing money on it over the course of time. If their well being is not taken care of, then the company seizes to exist. The primary aim of business is to effect sale for the product produced. Profit maximization is also the traditional and narrow approach, which aims at, maximizes the profit of the concern. Traditional theory assumes profit maximisation as the sole objective of a business firm. The business objective is a goal, i.e. Profit is the measure of the return on your investment. When leaders believe that their sole purpose is profit, they tend to view customers as "its." It leads to exploitation of workers and consumers. Profit is the driving force before and after entering into the business field. It is the duty of the top managers to see to it that the organisation culture is such set that all employees have a say in process they are incharge and change them for good. Here are 11 reasons why profit is essential to the longevity, growth and safety of the business: Essential for survival – Any entity cannot spend more money than it takes in. Investors invest their money in the business with the sole purpose of earning profit, since profit is a source of income, it is therefore provides the owners of business the mean with which they and their family members can live a comfortable life. In fact profit making is the primary objective for which a business unit is brought into existence. Another role of profit in business is economic development. Copyright © 2015 PublishYourArticles.Net, All rights reserved. However, what that value is and to whom it accrues is an important consideration. So earning of profit is necessary for the continuity of business. PublishYourArticles.net - Publish Your Articles Now, Copyright infringement takedown notification template. The incentive of earning profit keeps the man engaged in business activities. Earning of profit should be the objective of business units. 1. Profit earning is essential for the survival and growth of business enterprises. Because of the importance of profit to business, it has been rightly told that “Profit can be no more than the objective of a business than eating is the objective of living”. maximization of profit is not desirable because it leads to exploitation. The key points underpinning the economics of a profit maximizing firm Neoclassical model of the firm states that organization will have the main objective of maximizing its profit within a given period of time. Just as a person cannot live without food, a business firm cannot survive without profit. VII. Profit is the lifeblood of business, without which no business can survive in a competitive market. What are the main objectives of a business. Goals are general while objectives are specific.A company’s business objectives provide a picture of how it plans to achieve its goal. I will be looking at the problems and requirements when aiming to begin a business either in … The role of profit in business can be judged from the following points. If the firms are not earning profit then there is no economic progress in the country. The answer will be Profit maximization and earning is not the sole objective of business. Large firms pursue such goals as sales maximisation, revenue maximisation, a target profit, retaining market share, building up the net worth of the firm, etc. Infact profit is the oil which drives the wheels of business. Most private sector businesses have this as their main objective. Every business makes an attempt to reap maximum profit as possible in the given market conditions. Wealth Maximization Objective 3. Every business aims to earn a reasonable profit in order to survive and grow in this competing world. Set goals for profit levels and make decisions based on growing profit. The objectives are: 1. 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