A firm is an association of individuals who have organized themselves for the purpose of turning inputs into output.
Nature
Of The Firm
A firm is an association of individuals who have organized themselves
for the purpose of turning inputs into output. The firm organizes the factors
of production to produce goods and services to fulfill the needs of the
households. Each firm lays down its own objectives which is fundamental to the
existence of a firm.
The major
objectives of the firm are:
1. To achieve the Organizational Goal
2. To maximize the Output
3. To maximize the Sales
4. To maximize the Profit of the Organization
5. To maximize the Customer and Stakeholders Satisfaction 6. To maximize Shareholder’s Return on
Investment
7. To maximize the Growth
of the Organization Firms are established to earn
profit, to keep the shareholders happy. To increase their market share, they
try to maximize their sales. In the present business world firms try to produce
goods and services without harming the environment. Firms are not always able
to operate at a profit. They may be facing the operating loss also. Economists
believe that firms maximize their long run rather than their short run profit.
So managers have to make enough profit to satisfy the demands of their
shareholders and to maximize their wealth through the company.
Tags : Managerial Economics - The Fundamentals Of Managerial Economics
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