'Profit earning is not the only objective of the business ? Give any four reasons to justify the statement.
'Profit earning is not the only objective of the business ? Give any four reasons to justify the statement.
The sole aim of earning profit has the following effects on a business :
(a) Ignores the interest of workers : Labour is one of the most important factors of production. Profit maximisation by-passes the interest of workers in the way that they do not get fair remuneration and hence are not motivated. In the absence of motivation, they will not work up to their full potential. Resultantly, quality and standards of the products and services will deteriorate and will ultimately lead to losses.
(b) Ignores the interest of customers : Customers are very important for every business in the sense that without their existence, even thinking about business is merely a dream. Profit maximisation by-passes their interest because goods/services are overpriced which ultimately leads to a reduction in thenumber of customers, a reduction in the quantity of sales and thereby reduction in profits.
(c) Ignores the interest of society : Profit maximisation overlooks the interest of the society in which it works. It may propel a businessman to indulge in unfair trade practices like hoarding back marketing etc.
(d) Ignores long-term interest of the business itself: Profit maximisation may be the objective for the short term, but in the long term it may lead the business to a dangerous position where it could become very difficult for the business to even survive.
The sole aim of earning profit has the following effects on a business :
(a) Ignores the interest of workers : Labour is one of the most important factors of production. Profit maximisation by-passes the interest of workers in the way that they do not get fair remuneration and hence are not motivated. In the absence of motivation, they will not work up to their full potential. Resultantly, quality and standards of the products and services will deteriorate and will ultimately lead to losses.
(b) Ignores the interest of customers : Customers are very important for every business in the sense that without their existence, even thinking about business is merely a dream. Profit maximisation by-passes their interest because goods/services are overpriced which ultimately leads to a reduction in thenumber of customers, a reduction in the quantity of sales and thereby reduction in profits.
(c) Ignores the interest of society : Profit maximisation overlooks the interest of the society in which it works. It may propel a businessman to indulge in unfair trade practices like hoarding back marketing etc.
(d) Ignores long-term interest of the business itself: Profit maximisation may be the objective for the short term, but in the long term it may lead the business to a dangerous position where it could become very difficult for the business to even survive.
