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What is an explaination of baumol's sales maximization theory?
Baumol's sales maximization theory posits that firms, particularly in the context of oligopoly, prioritize maximizing sales revenue over profit maximization. The rationale is that higher sales can enhance market share, increase managerial power, and improve a firm's competitive position. Managers may focus on increasing sales to satisfy stakeholders, including employees and shareholders, rather than solely maximizing profits, which can sometimes lead to short-term profit sacrifices. This approach reflects the complexities of managerial objectives in real-world business environments.
What is sales maximization model?
Term sales maximization Definition: The notion that business firms (especially those operating in the real world) are primarily motivated by the desire to achieve the greatest possible level of sales, rather than profit maximization. On a day-to-day basis, most real world firms probably do try to maximize sales rather than profit. For firms operating in relatively competitive markets, facing relative fixed prices, and relatively constant average cost, then increasing sales is bound to increase profits, too. Moreover, according to the notion of natural selection, even firms that seek to maximize sales, those that also maximize profit will remain in business.
What are some shortcomings of the goal of profit maximization?
Profit maximization includes some shortcomings like it ignores the risk that corresponds to the project's stream of cash flow. The timing of returns are ignored with this objective and it does not have as much relevance to a monopoly firm.
Explain why operating leverage decreases as a company increases sales and shifts away from the break even point?
"Explain why operating leverage decreases as a company increases sales and shifts away from the break-even point."
Is there a difference between corporate profit maximization and maximization of shareholder wealth?
Sure, profit maximization relates to profits *only* while shareholder wealth also involves total company equity, debt ratios and any of 15 other financial performance measure ratios. Management could focus on profit maximization over a longer period of time, say, 40 years (Toyota), while the shareholder would rather see stock values and corporate total value increase immediately (get in and get out) (90% of American manufacturers). If management focused on short-term profit maximization, say at the expense of long term sales revenues, then shareholder wealth (stock price) could actually decrease as a result of the loss of market share. The conflict of interests between shareholders and executives is an example of the "principle-agent problem."
Sales maximization vs profit maximization?
sales maximization technique is generally used in scale industries where base of the expenses is largelly fixed and where variable costs are limited. on the other hand profit maximization technique are used by variety of industries. total output is higher in sales maximization as compared to profit maximization
What is the Difference between profit maximization and sale maximization?
The key difference between profit maximization and sales maximization focuses on the handling of costs/expenses. Sales maximization is a topline income statement action that attempts to maximize sales revenues. Sales maximization techniques are used in scale industries where the expense base is largely fixed and there are limited variable costs associated with acquiring the next dollar of sales. Profit maximization is a multiline income statement action that attempts to both maximize sales (as represented above) while minimizing expenses in order to maximize effective margin. Profit maximization techniques are used across a variety of industries.
What is the meaning of sales maximization?
i don t know
What theory that explain sales and inventory system?
hindi ko rin alam
How does advertising helps in sales maximization?
advertises are main base of the sales,,,,,,,, becs then oly people came to know dat about the product
What are the criticism baumol's sales maximisation model?
Criticism of Baumol's sales maximization model includes the assumption of profit maximization as the main goal of firms, the lack of consideration for other objectives like shareholder wealth maximization, and the oversimplification of managerial behavior by focusing solely on sales revenue. Additionally, critics argue that the model does not account for dynamic market conditions and competitive strategies that firms may adopt.
What is Three basic reasons is profit maximization inconsistent with wealth maximization?
Profit maximization is a narrow view which accounts for only the difference between sales and costs Wealth Maximization is broader and more philosophical in approach. Wealth maximisation includes not exhaustively culture , synergy, value, potential and wealth
Why is wealth maximization a better operating goal than maximization sale?
The wealth maximization increases the net value that is current. The maximization sale involves obtaining the highest amount of sales without incurring any loses. Each, especially when used together, can be the better operating goal depending on the situation in which they are needed to be used.
What is the Risk in profit maximization?
The risk is that by trying to maximize your profits the quality of the products will drop and you will eventually lose sales
What is sales maximization model?
Term sales maximization Definition: The notion that business firms (especially those operating in the real world) are primarily motivated by the desire to achieve the greatest possible level of sales, rather than profit maximization. On a day-to-day basis, most real world firms probably do try to maximize sales rather than profit. For firms operating in relatively competitive markets, facing relative fixed prices, and relatively constant average cost, then increasing sales is bound to increase profits, too. Moreover, according to the notion of natural selection, even firms that seek to maximize sales, those that also maximize profit will remain in business.
Explain the evolution of sales management function in Indian context?
explain the evolution of sales management function in Indian context
Explain the need for sales organisation explain in detail various types of sales organisation structure?
The need for sales organization is to help in sales and marketing. Organization structure show the different levels of management.
