
            Is Profit the Only Concern of Businesses?


     The reason people go into business is to make money or in 
other words profit.  If the company is not profitable it would not 
survive too long and it can be very discouraging for the person who
is running the business so profit plays a very important role 
however, profit is not the be all and end all of the whole thing. 
     Business ethics is very important, for example; drug dealers
can make a lot of money but is that ethical?  They spoil the lives
of so many people by getting them hooked on drugs.  That is a very
wrong way to make money.
     Money made through proper channels enhances the lives of
people and enriches the nation.The purpose of an industry is the
fulfilment of human needs.  If industry can find customers for its
products or services, sell these products or services, and can
operate within the limitations set by its social obligations, then
it can justly claim that these needs are satisfied.
     No company can long survive without profit.  Profit is the
ultimate measure of effectiveness.  A profitable company is likely
to offer not only security of employment, but also promotion
prospects, job opportunities, and the intense personal motivation
that comes from being associated with success.
     Mankind is insatiable in its desire for material possessions
as is industry in its search of markets.  It is industry that makes
and sells the consumer goods so coveted by the public, and it is
the incomes generated within society that provide the means of
purchase.  If industry is efficient, goods will be freely
available, at prices acceptable to the consumer.  People will enjoy
the high standard of living that is the direct result of high
productivity.  If in short supply, prices will be high, and people
will be discontented.
     In the industrial context, efficiency and productivity are
virtually synonymous.  Each relates to the output resulting from a
given input, and the need for constant productivity improvement is
both a challenge and an objective to everyone concerned with the
prosperity of industry.  Assuming a steady level of employment, the
standard of living of a nation is a function of its labour
productivity, and the relationship between productivity, incomes,
and prices has been also so well publicized in recent years that
few people are entirely ignorant of it.
     The purpose of industry is the fulfilment of human needs, but
it must be admitted that most people find it difficult to equate
abstract definitions with the severely practical aspects of their
daily tasks.  The duty of the management is to achieve results. 
Without a doubt, the final result must be profit, and a business
can only earn a profit if it is able to utilize its resources
effectively, harness, innovate, exploit new markets and locate and
develop new opportunities.  It must know its strengths and
weaknesses, where it is going, and how to get there.
     A business has many resources, each of which is an integral
component of successful operation.  For example, a manufacturing
company has buildings, machines, tools, handling equipment, raw
materials stocks and many  other items which contributes towards
the finished product.  The essential basis of every cost reduction
programme is that it should reduce the resource content of the
finished product so that, for a given selling price, the profit
content will increase.  This is the real fundamental of company
operation, namely that a business has only a certain income
available to it.  If it allocates too much of this to labour and
the other items of cost, then too little will remain for profit. 
An unsatisfactory profit implies an unsatisfactory cash flow and if
this is inadequate the company will be unable to  replace machines,
purchase new equipment, or provide additional working capital for
expansion.
     The true income of a company is obtained by deducting, from
the value of sales, the values of all raw materials and the fund
from which all wages, salaries and profits must be paid, as well as
other items of operating expense, such as rent, rates and
deprecation.  The name given to this fund is "Added Value".  
Profit = Added Value - (Labour Costs + Fixed Costs)
       =Net Income - Operating Expenses.
     Added Value has long been used by national statisticians for
measuring the income.  This concept is constantly in the minds of
company executives whenever decisions are taken, the acid test of
their effectiveness will be whether they have resulted in an
improvement in the Added Value  per unit of resource input. 
Eventually, of course, greater effectiveness must result in
increased profits, but this may take sometime to happen.  The
reason for this is that profits are volume sensitive, that is they
are effected by changes in input.  The lower the output, the higher
the fixed costs per unit of output, and the lower the profit. 
Conversely, the higher the output the higher the profit.
     Business prosperity depends on many factors, all interwoven
and difficult to disentangle.  Some are subjective, consisting of
intangibles such as company image, market standing, technical
expertise, customer satisfaction and quality of product.  Others
are raw material utilization, labour and capital productivity, and
price levels.  These are all measurable and indeed must be measured
if a company is to be controlled.
     Power is undoubtedly an extraordinary strong motivating
factor.  Power and a sense of achievement are complimentary.  There
was an industrialist who said "I love my job because of the power
I wield.  If the company stopped paying me, I think I would be
prepared to carry on for nothing."  This remark is exceptional
because it is generally assumed that the main reason why people go
to work is for the money they earn.  This is true that no one would
work for nothing- unless of course he had a private income, and
there was some other factor, such as the enjoyment of power which
was most important.   
     Given then the nature of mankind, that he expects something in
return for the effort that he is putting in, profit is a major
concern of business.  For the entrepreneur, the motivation comes
from seeing the bottom line- Money.  life in all but the most
primitive societies would cease to exist if there were no means of
division of labour- that is job specialization- would be an
impossibility, and about the only people who would manage to
survive in a total- barter society would be those who were able to
grow sufficient food to keep themselves alive.  The rest would
perish without ever finding a person who would exchange the means
of existence for the results of their labour.
     Industry, commerce, and modern society can only survive
because money provides the means of exchange.  If money is scarce,
then the economic tempo is reduced, incomes are affected and hence
expenditure is reduced, then the sure and certain result is that
unemployment will rise.
     Human aspect is very important .  No industry can survive
without human beings working there.  Therefore, it is the people
who make the profit for the company.  The management of the company
has to ensure that the people are rewarded and motivated to achieve
the overall goal of the company- to make money.  The strength of
the success of large companies comes from the quality of people it
employs.  The working culture is the key factor where people are
brought in, trained to understand the complexities of the work
towards the common goal- to make the company a success.
     An investor who is investing his saving in the company must
get above average return in order to continue to invest and attract
other investments.  So return in terms of profit is the driving
force for the investor.  Ethics in business is very important to
survive in this competitive market.  Again, the ethics comes from
the people working for the company and the people controlling the
company ensures it is dealing in acceptable products, pay their
bills on time, look after the welfare of their employees and work
in accordance with the laws of the land.
     Finally a company can be compared to a ship, the sailors work
together under the direction of their captain to reach their
destination.  In a similar way, the employees of the company work
in harmony, in unison- under the direction of the management to
reach the destination for the company they work for profit.