Illustrate about sales maximisation, Managerial Economics

Assignment Help:

Q. Illustrate about Sales maximisation?

The concept that business firms (specifically those operating in the real world) are principally goaded by the aspiration to achieve the greatest possible level of sales, in place of profit maximisation needs due consideration. On a daily basis, most real world firms perhaps do try to maximise sales in place of profit. For firms operating in relatively competitive markets, facing relatively fixed prices and relatively constant average cost then increasing sales is bound to increase profits as well. 

Sales maximisation theory is an alternate theory to profit maximisation. W.J. Baumol (Economic Theory and Operations Analysis, 1965) is normally recognised as having first suggested that firms frequently seek to maximise the money value of their sales which implies their sales revenue, subject to a constraint that their profits don't fall short of some minimum level that is just on the borderline of acceptability. Or we can say so long as profits are at a satisfactory level, management will devote its efforts and energy to the expansion of sales. Such a goal can be explained perhaps by the businessman's desire to maintain his competitive position that is partly reliant on the sheer size of his enterprise. This goal can also rise out of management's vested interest because the management's salaries may be related more closely to size of the firm's operation than to its profits or it may simply be a matter of prestige. It's also Baumol's view that short-run revenue maximisation can be consistent with long-run profit maximisation and revenue maximisation can be regarded as along-run goal in several oligopolistic firms. Baumol also reasons that high sales attract customers to popular products.


Related Discussions:- Illustrate about sales maximisation

Theory of demand, when the data is descrete and incremental changes is meas...

when the data is descrete and incremental changes is measurable, what is it?

Gross domestic product, Gross Domestic Product A measure of national ec...

Gross Domestic Product A measure of national economic activity, GDP is measured from two approaches. GDP can be viewed as the total value of all goods and services produced in

Capital markets, CAPITAL MARKETS Markets in which financial resources ...

CAPITAL MARKETS Markets in which financial resources (money, bonds, stocks) are traded i.e. the provision of longer term finance - anything from bank loans to investment in pe

Will you make any profits in the short run, Problem 1: Using relevant e...

Problem 1: Using relevant examples, discuss the pricing strategies that firms can use to capture value from their customers. Problem 2: You are a manager in a perfectl

Government spending multiplier, Now, let's modify our model a bit. Let's ad...

Now, let's modify our model a bit. Let's add a fourth sector of spending so that Y = C + I + G + X n with X = X o and M = M = f (Y). Will this change, by itself, increase, decrea

Discount rate (bank rate), Discount Rate (Bank Rate) This is the rate ...

Discount Rate (Bank Rate) This is the rate on central bank advances and is also called official discount rate or "minimum lending rate".  When commercial banks find themselves

Scarcity, What is the role of scarcity in management decisions-making

What is the role of scarcity in management decisions-making

Non-accelerating inflation rate of unemployment, NON-ACCELERATING INFLATION...

NON-ACCELERATING INFLATION RATE OF UNEMPLOYMENT   During 1970s economists encountered a puzzle  in  the sense that  inflation and unemployment  data  did not  fit  into the Phi

Managers need to know economics resources, Normal 0 false fal...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd