Critical Evaluation of Adopting a simple profit-maximizing perspective Assignment

Critical Evaluation of Adopting a simple profit-maximizing perspective can have positive impacts for a firm - Assignment Example As it is figure out by some economists, those existence firms are surviving because they have achieved maximum profit based on profit maximizing level of that firm. The owner of the maximization of profit sets non-profit aims and ideas for its firm managers. The more the load a firm sets on returns and profits, it does not think much about the expenditure, which leads to maximize the profits of the firm (Kaneda & Matsui, 2003). Firms that do not maximize its profit are probably more out competing by proficient rival or acquired by people who can get better evaluation from it by following different plans and strategies (Romer, 2006). Managers are usually changed or fired if they fail to maximize firm’s profit which therefore shows that the profit maximization depends on behaviors of managers that should be consistent and it seems to be staying for long in that firm with the maximization of profits if managers adopt simple profit maximizing perspectives (Romer, 2006). ... The advance literature describes two models in the competitive model of the firm’s profit. The first model is the structure conduct performance model (SCP) that describes the extent of concentration in the industry, decides the behavior of the firm and its profitability (Stierwald, 2009). The higher concentration of the firm involvement can lead to higher profits and if the there is a difference between the characteristics of the firm such as level of efficiency, quality management and structure of organization, than the profitability of the firm is affected. The second model is the effect model, which states that within the industry, the firms are heterogeneous and they can be differentiated with their efficiency level. The firms that are more productive have a competitive benefit over the firms that are less productive and those firms earn high profits due to that high productivity (Stierwald, 2009). It is difficult that this requirement can regularly fulfilled by the firms as auditors have different figures related to profit and in order to maintain the profit maximization strategy, the firm should have regular and clear procedure of auditing. The focus of the firms should be on short-term profits because profit is given only once at a year therefore the firm should invest on long-term basis in order to gain the short-term profits (Anderson, Fornell, & Lehmann, 1994). Corporate Social Responsibility (CSR): A firm deliberately engages itself in social responsible activities to maximize it profits at private level according to some recent speculative and experimental studies (Schuler & Cording, 2006). The maximizing profit perspective of a firm can get hold of further profits