While making a profit is a simple and common objective for any for-profit business, company leaders surprisingly sometimes take their eyes off this goal. It leads to a number of corrupt practices. 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. I will be looking at the problems and requirements when aiming to begin a business either in … If there is no economic development there is no profit to the business. Every business makes an attempt to reap maximum profit as possible in the given market conditions. Profit helps in fulfilling various social goals because a business is expected to serve various sections of the society like the consumers and the labourers. However, in the real world, there are many other objectives that a firm can pursue. Profit earning should be regarded as the main objective of business unit. A business goal is vague in comparison.Whe… Profit earning is essential for the survival and growth of business enterprises. The people within the business have to be passionate about what they do and why they do it. Another role of profit in business is economic development. Profit is how you build something you can sell. Just as a person cannot live without food, a business firm cannot survive without profit. Profit is the measuring techniques to understand the business efficiency of the concern. Otherwise why would they? Other Maximization Objectives. Profit is the driving force before and after entering into the business field. Profit Maximization Objective 2. Profit is the lifeblood of business, without which no business can survive in a competitive market. Infact profit is the oil which drives the wheels of business. Profits must be earned to ensure the survival of business, its growth and expansion over time. It is a primary goal and long term future health of your business. 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. If the firms are not earning profit then there is no economic progress in the country. The objectives are: 1. Maximum profit was achieved at the output at which marginal cost is equal marginal revenue. Profit is the driving force before and after entering into the business field. However, in order for a business to become self-sustaining and capable of attracting investment, it must generate profits. I am going to look at this in the context of starting a small firm. III. Infact profit making is the primary objective for which a business unit is brought into existence. When leaders believe that their sole purpose is profit, they tend to view customers as "its." Although the main objective of business is to earn profit but it is not be the sole objective of business. It leads to exploitation of workers and consumers. As such the “Purpose of Business” became profit maximization. Profit is the total revenue from sales minus the total cost of resources employed by the entrepreneur. The primary aim of business is to effect sale for the product produced. Profit may be regarded as an essential objective of business for various reasons (a)It is a source of income for business persons. Profit is essential for the growth of business enterprise. Driving revenue and proving consistent profitability is a major goal for any business. Every business aims to earn a reasonable profit in order to survive and grow in this competing world. Independent from its potential to drive growth and development. Main aim of any kind of economic activity is earning profit. Profits enable a businessman to stay in business by maintaining intact the wealth producing capacity of its resources. IV. 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. Great business profits is an indication from a society that the company is providing things that they want. 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. Goals are general while objectives are specific.A company’s business objectives provide a picture of how it plans to achieve its goal. The incentive of earning profit keeps the man engaged in business activities. Value Maximization Objective 4. The survival of the business will be a day-dreaming affair in the absence of profit. You can lower prices or invest heavily to generate revenue, but if your costs are too high, you don't make profit. Disclaimer Copyright. Profit, therefore, is a reward for the future which is uncertain. so every business has the objective of production of goods. The culture should always be such that employees have that instinct to innovate in every aspect of the organisation, be it marketing, sales, clients, partners, etc. It leads to a state of social inequalities where rich becomes richer and the poor becomes poorer. 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. 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. Maximization of profit is opposed because of the following reasons: I. This is a very important question. Profit is the measure of the return on your investment. Business needs objectives, without objectives the business is like a car without headlights driving blind. What are the main objectives of a business. Profit is essential at the time of attracting additional capital for undertaking expansion and modernization measures. We can … Most private sector businesses have this as their main objective. When you emphasize short-term profit over long-term customer satisfaction you eventually implode. A business can only grow and gain strength if it earns profit. In practice firms have been found to be pursuing objective other than profit maximisation. PublishYourArticles.net - Publish Your Articles Now, Copyright infringement takedown notification template. The way leaders talk about customers matters. Earning of profit can be made when exchange of goods takes place. Business has many other objectives to accomplish. a. The value of the business drops dramatically. In fact profit making is the primary objective for which a business unit is brought into existence. Objectives to be fulfilled by business other that profits are: 1. Privacy Policy3. The business can be continued when there is a fair profit. Also Read:  What is Business Entity Principle in Accounting. In fact profit making is the primary objective for which a business unit is brought into existence. image source: ichef.com.au/wp-content/uploads/2014/01/profit.jpg. 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. It shows that the country is progressing satisfactorily. And the answer may surprise you. For the sake of more profit, the businessman may exploit the worker by paying less and may exploit the consumers by providing them less quality products. However, the business should not have the objective of maximization of profit because it leads to exploitation of the consumers. 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. It is a reward for a risk successfully undertaken. Profit earning should be regarded as the main objective of business unit. IV. Because it is the foremost factor in maximizing the wealth of the shareholders. Profit is the lifeblood of business, without which no business can survive in a competitive market. Infact profit is the oil which drives the wheels of business. 2. Role of Profit in Business, Is Profit the Sole Objective of Business In all business undertakings in the private sector, the main motive is to earn profit. 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