Profit Maximization
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Profit Maximization
Profit maximization is the sole purpose of each business. The businesses that do not maximize profits end up bankrupt. First, profit maximization is the long or short-run procedure in which companies try to establish the output and input levels and price in which the highest profit is realized (Hategan et al, 2018). Several benefits arise from maximizing profits. The benefits include the higher income or wages paid to workers and owners if the profits realized will be equally distributed among all the business corporation members. Also, more profits lead to more development and research in a business. The research can go a long way in benefitting the consumer due to the product improvement. Also, profit maximization is essential in building up the savings that will be crucial in surviving an economic recession. Therefore, profit maximization is an essential aspect that each business needs to acquire.
Corporate social responsibility is a concept that checks on environmental and social concerns through the involvement of the business. There is a huge relation between corporate social responsibility and the profit maximization concept (Weersink & Fulton, 2020). Most companies that engage in corporate social responsibility will tend to have high financial returns. The enormous financial returns are brought by the increase in prices and sales and reducing employee turnover. Therefore, this will increase the profits of the company, thereby enhancing the stock options and price. Profit maximization can also lead to social welfare in that the businesses that maximize profits give social benefits to the producers and the consumers. Therefore, firms should make it an objective to maximize profits.
References
Hategan, C. D., Sirghi, N., Curea-Pitorac, R. I., & Hategan, V. P. (2018). Doing well or doing good: The relationship between corporate social responsibility and profit in Romanian companies. Sustainability, 10(4), 1041.
Weersink, A., & Fulton, M. (2020). Limits to profit maximization as a guide to behavior change. Applied Economic Perspectives and Policy, 42(1), 67-79.