Profit Maximization

Profit Maximization - Profit Maximization Note: This theory...

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Ethical Decision Bases Profit Maximization
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Profit Maximization Key Principle : The objective of a business  decision should be to maximize the corporation’s  profit and shareholder value.  Note that this  means profit and shareholder value in the long- term, not the short-term.
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Profit Maximization Constraints (assumptions that must be met for profit  maximization to be an ethical theory). The law must be obeyed There must be open and free competition There must be no deception or fraud.
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Why are these constraints necessary? Otherwise, according to the theory, societal  benefit may not be maximized.  And,  importantly, if they are, societal benefit WILL be  maximized, according to the theory.
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Unformatted text preview: Profit Maximization Note: This theory only relates to a corporation. It is not a theory that relates to an individuals personal profit maximization. Profit Maximization Criticisms/Weaknesses as an Ethical Decision Basis. Assumption of open and free competition often not met. Can cause undo harm to some stakeholders, under the principle the ends justify the means (as with utilitarianism, to be discussed in a few weeks). As such, may not account for externalities. Puts a great deal of pressure on the law to reflect societys values. Hard to define deception. Biases may affect decision making....
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Profit Maximization - Profit Maximization Note: This theory...

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