Management and Profit Maximization

Management and Profit Maximization
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The management function in each business is geared towards improving the financial stability of the company. They are also required to ensure that the company looks into the future and can make sound decisions at the current time. One of the decisions that the management makes is on profit maximization and taking care of the stockholders. In the ordinary course of operations, the management may find it difficult to come up with a clear line of separation between the shareholders’ interests and the profit maximization objectives.
The convergence may arise from factors such as the need for the management to paint a successful picture for the shareholders. This would ensure the shareholders are comfortable with the business and can continue investing. This would also help in attracting more investors into the business and ensuring continued stability (Roe, 2001). The concept of profit maximization also ensures the management appears to be succeeding in leading the company. This would ensure that the shareholders feel comfortable retaining the current management. The need to be successful may push the managers to act in ways that may be regarded as unethical or illegal.
The concept of profit maximization has been glorified to a large extent in the field of commerce. This has led to a situation where most businesses are willing to walk the dark path to ensure continued success. Other avenues can be used by businesses to measure success apart from the amount of profits recorded.

This includes employee welfare which focuses on ensuring the workforce is catered for (Roe, 2001). The business should also focus on areas such as corporate social responsibility which shows that they are working for the community.
References
Roe, M. (2001). The Shareholder Wealth Maximization Norm and Industrial Organization. SSRN Electronic Journal. doi: 10.2139/ssrn.282703