Is the goal of a business simply to maximize profits for its owners? Why or why not?

Profit Maximization in Businesses
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Introduction
Profit maximization is merely the primary goal of most businesses across the globe. Such businesses tend to engage in practices that do not serve other business purposes other than making profits and facilitating continued business activities. Similarly, a business that only seeks to maximize its profits does not hold any obligation to other stakeholders such as its customers and the society the business is situated (Hörisch et al., 2014). Therefore, companies should not assume profit maximization as their only goal. The paper seeks to establish the reasons why profit maximization should not be the only business goal. Further, it provides the various consequences of focusing solely on profit maximization. The paper utilizes the stakeholder model to support arguments against profit maximization.
The Stakeholder Vs Shareholder Models of Business
The shareholder theory of business proposes that only the owners or shareholders of a business are the only essential part of a business. As a result, meeting the needs of business owners is considered the priority of business (Hörisch et al., 2014). In such cases, businesses are argued to have a responsibility to earn profits and add value to the business. The stakeholder model, on the other hand, argues that a business cannot focus on meeting the needs of shareholders without taking into consideration the stakeholders who contribute towards the success of the business.

In such context, the needs, as well as requirements of the government, suppliers, customers, employees, the community, and trade associations, should be considered during business processes. Stakeholders are in fact the essential part of the business as a business relies on them to survive (Hörisch et al., 2014). For instance, a business cannot produce goods without employees and cannot sell without customers. Stakeholders such as trade associations and governments require businesses to adhere to their laws and regulations, contrary to which the owners face both economic and legal consequences.
Why Should Profit Maximization not be the Sole Focus on Business?
Businesses should not focus on profit maximization for various reasons. First of all, profit maximization encourages unethical business practices (Eskerod et al., 2015). Companies that seek to maximize profits do not have obligations to their stakeholders, which makes it easier to violate ethical requirements such as quality and safety of goods, protection of the environment, and provision of honest information to consumers. As a result, such businesses can intentionally use misleading information to coerce consumers into buying the company’s products. Further, the businesses can engage in polluting activities just to reduce operating costs (Eskerod et al., 2015). For instance, improper dumping of waste and releasing harmful gases into the air can contribute to massive environmental pollution. In such cases, the business can incur consequences such as financial penalties for polluting the environment.
Additionally, the business can exploit suppliers by offering meager prices for raw materials or goods. Consumers, on the other hand, are exploited by being charged high prices for low-quality goods. In such cases, the organization creates a hostile business environment (Eskerod et al., 2015). Although the practices may result in positive outcomes in the short term, they have long negative long-term impacts on the business. For instance, false advertising attracts large numbers of customers, which leads to increased sales volume and eventually high-profit levels. Exploitation of suppliers, on the other hand, creates a more substantial profit margin for the business (Eskerod et al., 2015). However, consumers can easily shift to other products on realizing that they are being exploited. Similarly, suppliers would have the business as a last resort by prioritizing other businesses that offer desirable prices. In the long run, the business can experience inadequate supply and low sales, which would affect even its ability to operate.
Governments on the other hand issue the licenses to operate a business. In situations where a business breaks the law or does not operate according to regulations, governments can easily revoke the license to run the business (Eskerod et al., 2015). Cases such as overpricing subsidized goods and failure to meet health standards can also force the government to close a business. Similarly, trade associations earn negotiating power for member businesses. The membership of a business that does not adhere to requirements provided by trade associations can be revoked, which may have consequences such as being banned from marketing in a given region. Such occurrences can reduce the market available for a company’s products (Eskerod et al., 2015). Further, employees are an essential part of the business. In any business, employees are the key production factors. In such context, businesses should not maximize profits while depriving employees a safe working environment.
Conclusion
Although the maximization of profits seems a preferable option for businesses, it should always be avoided. Focusing on profit maximization can lead to the violation of various business ethical principles, which would have negative implications for the business. Further, profit maximization can strain the relationship among business stakeholders, which may result in consequences such as inadequate supply, fewer customers, and revoking of the operating license. Employees in a profit-maximizing business can also be demotivated by hostile work conditions, which would contribute to low productivity and eventually affect the continuity of business processes. Companies should not only focus on meeting the needs of shareholders, but also those of its shareholders.
References
Eskerod, P., Huemann, M., & Ringhofer, C. (2015). Stakeholder inclusiveness: Enriching project management with general stakeholder theory. Project Management Journal, 46(6), 42-53.
Hörisch, J., Freeman, R. E., & Schaltegger, S. (2014). Applying stakeholder theory in sustainability management: Links, similarities, dissimilarities, and a conceptual framework. Organization & Environment, 27(4), 328-346.