Profit maximisation is the main purpose of all business firms? True or false with reasons.

Sir i know this is not an accounts related question. But i have been given this question by my teacher teaching me the subject Business Environment. I am very confused as in my textbook it states that for profit making firms, profit should not be the main purpose. And i also feel that profit maximistaion shouldnt be the main purpose as there are other objevtives as well. Please help me out by providing you opinion. Thanks.

asked Jan 10, 2016 in General by Mahima (23 points) 335 views

1 Answer

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Profit is the main driving force behind all the business organisations and because of this motive, an economy progresses.  In earlier days it was believed that profit maximisation should be the motive of all firms.  This thought is now changing in view of more awareness about the sustainability of growth and requirement of equitable distribution of resources.  Now society and governments world over have started realising that resources of the world belong to all and not to select few. Moreover, the resources of the society are limited and these should be used in such a way so as to maximise the social good.  Due to this governments have started realising that they cannnot give free hand to private firms  to charge whatever they want for their products.  Now laws are being framed for Corporate Social Responsibility.  Another view which has gained in recent times that even the employees are stakeholders in a business, hence their welfare is also the responsibility of the business.   Hence better working conditions should be provided which may increase productivity in the long run but in short run may reduce profits.  So all the points discussed above indicate that profit should not be the sole objective of any business organisation.
answered Jan 10, 2016 by jbsclasses (3,971 points)