Why are businesses set up? To gain profits. What about profits? To maximise profits.
Well, yes, I do admit that some businesses do not always want profits, but it is quite important that firms know where the money are coming in.
The important thing to remeber is, even before and after firms are able to earn profits, there are other objectives that they must keep in mind.
Profit maximisation seems to be the universal goal.
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But maximising profits will not help you when you are a firm that struggles to survive. In the latest comment from Tesla CEO Elon Musk, the businessman suggested that Ford, a rival company, might not be able to survive the next recession, despite the irony that Tesla was also once troubled by its debt.
“Making a car company successful is monumentally difficult,” he said.
There have been many attempts to create a car company and they have all failed, even the ones that have had a strong base of customers, thousands of dealers, thousands of service centers, they’ve already spent the capital for the factories, like GM and Chrysler, still went bankrupt in the last recession.
Other objectives include business growth, market share and csr.