Practitioners, scholars and economists believe that Profit maximization as a sole goal of a firm is an outdated approach. Our market has changed its focus from sellers to the consumers and now to add the cherry on the cream you need to be a socially aware and contributing firm. And that’s why most companies are adopting the Go green concept.
Let me make you familiar with the various stakeholders of a company. What are stakeholders? Well, they are all the people associated and affected by the running of the particular business.
Shareholders: Owners, by owning equity shares of the company by whatever percentage. They get the voting right in decision making and dividends out of profit for their investments.
Customers, Suppliers, Creditors, Banks, Employees, Government, Trade Unions and the Society at large which get affected by the functioning of your business.
Now which among these are the most important one? The decision is tough. Profit is primarily very important to survive and grow. Most of the stakeholders are depended on the revenue of the business. So, I don’t feel a company should be ashamed of saying that its’ goal is profit maximization. But yes, it shouldn’t be the only goal. The world is too commercialized and there are several products flooded in the market. If your activities don’t contribute further to the growth of the society but rather degrades it, chances are that people might opt for other things. It is essential to walk with time, rather ahead of time. Everyone is earning profit but how you utilize it, which makes a difference. But only working on the social aspects to help people environment and people is not enough. That leads to blurring of your business focus.
Many rich billionaires are donating a fortune to various developing nations to help them deal with their problems. They surely get a Savior and good image in everyone’s eye. Other companies should take care that the money is just a humble percentage of their profit and not the major chunk of the pie. Find the balance between every goal. Today’s world wants everything from every little thing. In an effort to show the charity side of the business, your survival shouldn’t become a question.
– D.V.P
FinancialDoodle 