Simple Profit Maximizing Perspective Essay Example | Topics and Well Written Essays - 2000 words

Simple Profit Maximizing Perspective - Essay Example Firms use these strategies as the spring board for their activities towards profit realization. These strategies introduce both positive and negative results to the organization. Positivity arises when the firm meets its targets and rewards employees and shareholders. Negative results arise when managers concentrate on personal development instead of the firm’s goals. The firm may also engage in unethical practices in order to achieve its profit goals. Therefore, there is need for strategic management of the firm’s profit strategies to prevent the workers from going overboard to introduce negative impacts to the firm. Profit maximization perspectives Total revenue- total cost Total revenues are derived from the amount a firm receives from the sale of its output. Total costs include all expenses incurred by a firm in buying the inputs required in the production process (Grant, 2002). This perspective begins with determining the optimum quantity of output that will maximi ze profits. The quality of the output is also considered in the planning stage. Firms processing high quality products attract several customers, which increases their revenue. A firm is considered profitable when the total revenues exceed the total costs. As illustrated in the diagram below, the curve illustrates profit maximization point for a firm in a perfect competition market. The optimal level of output at which the firm should operate to maximize profits is point C. At this point, the total profit curve is also at its maximum; therefore the firm can maximize its profits. Figure 1.0 Total revenue-total cost curve Source: Journal of Political Economy, 108 (3): 604-631. Marginal revenue- marginal cost This perspective holds that for each unit sold, a deduction of marginal cost from the marginal revenue will result to a marginal profit. At a certain level of output, the marginal profit becomes positive when marginal revenue exceeds marginal cost (Smith, Ferrier & Ndofor, 2001). This firm can adopt this level as the optimum level of production and the number of units produced should not fall below this level. Where the marginal cost exceeds the marginal revenue, the firm is making marginal losses, and this is an indication that the firm should produce fewer units of output. When the marginal cost is equal to the marginal revenue, the marginal profit is zero and the firm is considered to be maximizing profits. The goals of a firm are crucial as they are the elements that lay a foundation for understanding, predicting and interpreting different profit behaviors experienced by different firms. Some profit maximization strategies may have a conflict with the employees of the firm leading to negative impacts. Profit maximization perspectives limit the ability to understand how the firms utilize different methods and techniques to achieve their goals and objectives. The agency theory gives the relationship between the ownership structure of a firm and the profit maximization objective. The theory demarcates ownership from control of corporate organizations (Berle, & Means, 2006). This leads to a nonprofit maximizing behavior if managerial and individual needs have a mismatch with the profit goal of the organizational. This is common in firms where the managers have different goals from those governing the entire firm. The managers strife to achieve and maximize personal utility and they end up compromising the profit targets of the firm (Gupta et al., 2004). In microeconomic theory, it is argued that only

Human Resource Interview Essay Example | Topics and Well Written Essays - 1000 words

Human Resource Interview - Essay Example This is in a bid to have a point where employees can be recruited, selected, trained, and given the necessary guidelines to pursue their responsibilities. This paper summarizes an interview I conducted with Kevin Warns the HR manager of Wabash Valley Power Association (Price, 2011). Kevin Warns is the Human Resource (HR) manager at Wabash Valley Power Association which has its headquarters at Terre Haute, Indiana. Kevin lives in within Delaware, Indiana with his family and his address is Delaware, Indiana 569034-001 and phone number is (302) 654-0000. He can be reached through the office email address kevin@wabashvalley.org as the human resource manager who has been with the company for the past 5 years. Kevin involvement in human resource development stems from various companies and he has eleven years of experience, Wabash Valley offers wholesale circulation of power in 28 cooperatives within Indiana, Illinois among others. Kevin duties and responsibilities include ensuring that Wa bash Valley Power Association generates efficient programs that enhance the reputation of its employees. This means focusing on ensuring that Wabash Valley employees have the right skills, attitude and expertise to complete their jobs efficiently. This means that he coordinates recruiting, selection and hiring employees while at the same time training as well as guiding them to fulfill their duties efficiently. It is his duty in coordination with the training manager to evaluate, monitor, and counsel employees so that they can achieve their full potential. In addition, he takes the responsibility of ensuring the employees are working in a safe and secure environment. This means guaranteeing that they have the right tools and equipment necessary for completing their tasks efficiently (Price, 2011). Kevin has the role of creating compensation plans, appreciation policies, direct compensation, and reward as well as punishment. It is imperative to deal with job-related accidents, employ ment lawsuits, and any unresolved conflicts among employees. Kevin uses his tools and abilities to foster growth in employees within the company. For instance, he focuses on encouraging employees to maximize the level of sales using training procedures, enhancing engagement levels, and sending focused workers to educational seminars. It is clear from the interview that Kevin preserves management procedures by, modernizing, and endorsing human resource polices that have the potential to accomplish goals of Wabash Valley. Kevin indicated that he participates in team effort to complete result oriented duties that are essential to the company (Sims, 2007). Kevin argues that HR manager requires various competencies, skills and knowledge to successfully achieve human resource development, the first competence is having knowledge of the business and its operations. It is paramount for HR to realize the business strategy, how the business generates money, technological practices involved, a nd organization potential among others. The HR manager ought to have understanding of various business fields like finance, marketing, Information Technology, operations and management. Kevin suggests that HR director should have awareness of â€Å"Best Practices† necessary to deliver quality services. In this way, continuous process of enhancing expertise in their filed and awareness of high tech best practices in recruiting, development, compensation, performance execution among other HR duties. Kevin emphasizes the need to deliver exceptional skills of people management and focus in a bid to take the business to its next level (Price, 2011). In addition, Kevin indicates that HR manager must have the capability to change management skills in a flexible manner.