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

Definition of oligopoly, Mrs John Robinson- 'Oligopoly is market situation ...

Mrs John Robinson- 'Oligopoly is market situation in between monopoly and perfect competition in which the number of sellers is more than one but is not so large that the market pr

In how costless bargaining will lead to a socially efficient, A firm can pr...

A firm can produce steel with or without a filter on its smokestack. If it produces without a filter, the external costs on the community are $500,000 per year. If it produces with

Costs of economic growth, Costs of Economic Growth (Increase in National In...

Costs of Economic Growth (Increase in National Income) 1.     People living in industrial towns suffer from the effects of a polluted atmosphere. 2.     The manufacture of

Porter’s Five Forces, bargaining power of customer for a cement company

bargaining power of customer for a cement company

Explain about the marginal analysis, Explain about the marginal analysis. ...

Explain about the marginal analysis. The optimal quantity of an activity is the level which produces the maximum probable total net gain. The principle of marginal analysis

Components of demand forecasting system, Market research operations to obta...

Market research operations to obtain reliable and relevant information about the trends in market. A data analysing and processing system to estimate as well as evaluate the s

Theories of economic growth-neoclassical theory, Neoclassical Theory Th...

Neoclassical Theory The neoclassical theory of economic growth began its career in the fifties and since the mid fifties a sizeable literature has developed. The theory largely

Deemand forecasting, Q 3. What is Demand Forecasting? Explain in brief vari...

Q 3. What is Demand Forecasting? Explain in brief various methods of forecasting demand.

Explain the no new substitutes for the commodity, No new substitutes for th...

No new substitutes for the commodity If some new substitutes for a commodity appear in the market, its demand normally declines. This is quite natural, since with the availabil

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