Question

The primary goal of most businesses is profit maximization. Discuss the concept of profit maximization. How can it be reconciled with corporate social responsibility? Can profit maximization promote social welfare?

Answer 1

Profit maximization is considered to be the primary goal of most businesses. It means that selling the goods and services at a price where the total revenue exceeds the total cost that is for a profit.

The companies can strategically exercise corporate social responsibility to increase private profits. Since CSR increases company profits, most large companies are actively engaged in it. The shareholders value the company's social welfare activities. This will increase the value of the company. Thus the stockholders will be happier. This will improve the image of the company in the public which may result in higher sales, improve employee loyalty and attract better personnel to the company. Better staff availability will enable the company to differentiate its products and to make profits.

Thus the objective of profit maximization can be reconciled with corporate social responsibility. Profit maximization can promote social welfare.