Is Maximizing Profit the Primary Objective of Any Business Organization?

In these last few days I found myself reading again my old text books on the fundamentals of management and marketing in order to prepare myself for the task ahead for the commercial operations of the Pilipinas I-Cafe Consumer Cooperative. You might be thinking that this is the guy who had handled this subject for a number of years, teaching these same principles to a bunch of high school and college students. I have also been engaged in business so I must have known these things by heart. But reading these books again made me wonder have I really learned my lesson.

When the time came that I have to leave my academic life and engage myself in business I have adopted the principle that “business organizations are being organized in order to provide the maximum profit for its owners.” I have always adopted the maximizing profit approach in business for I believed that it was the best avenue to follow. For me then a business organization is more on controlling cost so that you would have the best returns possible.

The problem with this line of thinking is that you tend to cut corners most especially if times are a bit rough. When sales are down you tend to think ways in which you could cut down on cost even to the point of sacrificing the quality of your products and services. My family used to own a bakery that provided for our family for three generations. It was set up by my grand parents after the great war and was operated mainly by my aunt and that of my mother. When it was time for me to take over the management of our family business I had my share of difficulties. Even though we have been operating for more than 50 years I had noticed that sales were declining and I had to resort to cost cutting measures just to make ends meet. In the end about three years ago we have finally decided to stop the production of our bread line since it is no longer profitable.

This is also true when I set up my own internet cafe business. At the start business were very brisk since I was able to develop a group of regular customers that I could rely on to patronize the services that I was offering day in and day out. I started getting comfortable again and started dreaming knowing that I could rely on these group of people to provide me with a stable sale figure on a daily basis. But yet one day I woke up looking at an empty internet cafe realizing that most of the customers that I have depended upon all these years have all grown up and moved on with their lives.

My story is a typical story of most internet cafe operators who are having a hard time coping with slipping sales revenues. We tend to look at it as a function of cost and therefor instead of operating with the usual air conditioned comfort we tend to limit the number of hours of its operations or sometimes none at all. But the problem is that most of our internet cafes are so designed for the continuous use of air conditioned units to provide comfort to our customers. Thus most of the internet cafes that I had the chance to visit are often very hot an smelly. We tend to wait for the purchases for our upgrades noting that we would prefer to wait till there are signs that there will be good times ahead but those days would never come if tend to control your cost.

All points taken then we ask “What is business really all about?’ Maximizing profit is still the primary objective of any business organizations but the manager must realize that this is not the immediate goal. What is needed to be addressed is the creation of initiatives that would ensure the continuous development of new customers and market in order to achieve the primary goal of maximizing profit.

Going back to the story regarding my engagement in our bakery operations, noting that we have been operating for more than 50 years I became so complacent that I was really sure would have a regular flow of customers that would patronize the breads that we were producing on a daily basis. Unknown to me that since we have been operating that long time came that most of the regular customers that I have relied on to these past couple of years were now either dead or has moved on. I was not able to introduce my products to a new set of customers and able to culture their taste. This is also true in relation to my internet cafe since most of my regular customers has all grown up and moved on then I am left with an empty shop hoping that sometime in the future I would be able again to enjoy what I had enjoyed in the past.

What does it need to survive in business? Business managers must continuously strive to attract new customers to patronize the goods and services that they are offering. One could not rely mainly on their regular customers for their continuous patronage but on the continuous development of customers base. More customers who knows what your product is all about means more opportunities to maximize your profit base.

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One response to “Is Maximizing Profit the Primary Objective of Any Business Organization?

  1. cutting corners is ok if you do not have to sacrifice quality or product and service. quality should always be at the forefront for nobody likes buying a crappy product. they would try it once, and if disappointed, would not be a returning client.

    if economics dictates that you have to increase prices, then do so. it would afford you to provide the quality services you have been known for, for a profit that would also afford your business to survive.

    in my nearly 9 years in the internet cafe, i have had many competitors diving on the market value of the services we provide. all of them have closed shop eventually. instead of going down to their level, i improved on my services. although customers would want the best bang for the buck, quality is still at the top of the their list of priorities, and that is what keeps them coming back. their recommendation is also a main reason for having new customers to coming in.

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