What is meant by profit motive?
The profit motive refers to an individual's drive to undertake activities that will yield net economic gain. Because of the profit motive, people are induced to invent, innovate, and take risks that they may not otherwise pursue.
The profit motive is generally a good thing. It drives hard work, innovation, and the success of the capitalist system.
Profits are important because:
– they provide a measure of success of a business which is important for new businesses. – they are the best source of finance/capital to invest in expanding the business. – they attract further funds from investors enticed by the possibility of high returns on their investment.
Free-market economists argue that the profit motive, coupled with competition, often reduces the final price of an item for consumption, rather than raising it. They argue that businesses profit by selling a good at a lower price and at a greater volume than the competition.
Capitalism is often thought of as an economic system in which private actors own and control property in accord with their interests, and demand and supply freely set prices in markets in a way that can serve the best interests of society. The essential feature of capitalism is the motive to make a profit.
The profit motive is typically the object of ambivalent moral attitudes in present-day society: on the one hand, the plethora of commodities and services made possible by the modern market economy, fuelled to a large extent by the profit motive, are easily recognizable.
The profit motive also promotes greed in its most potent form by encouraging hoarding: the successful competitors strive to accumulate a larger surplus than their rivals, because the bigger their pile, the more secure their position.
An investment may not generate any income, or may actually lose value over time. For example, a company you invest in may go bankrupt. Alternatively, the degree you investing time and money to obtain may not result in a strong job market in that field.
Investment is the purchase of capital or productive assets, such as machinery and business premises. The aim of such expenditure is to enable the production of goods or services that will generate future cash flow and profits for the business.
Investment income is the profit earned from investments such as real estate and stock sales. Dividends from bonds also are investment income. Investment income is taxed at a different rate than earned income.
Which companies are motivated by profit maximization?
Firms that are managed by their owners, such as sole traders, may try to maximise profits, whereas firms run by professional managers may look to maximise sales revenue, given that they are usually paid a salary from revenue rather than from profit.
Let's say a company earns revenue of $10,000 on sales of stuffed animals. Explicit costs amount to $5,000 and implicit costs to produce them total $2,000. Using the formula above, we can determine that the economic profit of producing these toys is $3,000 ($10,000 - $5,000 - $2,000).
- Intrinsic motivation: This is when motivation comes from "internal" factors to meet personal needs. We do things we do because we enjoy them, not because we have to. ...
- Extrinsic motivation: This is when motivation comes from "external" factors that are given or controlled by others.
- Leadership style. Management style deeply impacts motivation. ...
- The reward system. As a manager, ensure you have a clear evaluation system in place that motivates employees. ...
- The organizational climate. Otherwise known as workplace culture. ...
- The structure of work. Is the work rewarding?
The Four Forms of Motivation: Extrinsic, Identified, Intrinsic, & Introjected.
The profit motive that drives companies and individuals all too often gives way to greed. The power of leadership all too often gives way to elitist domination. The accumulation of wealth can look like excess or hoarding while income inequality increases in economies around the globe.
Profit motive turns the businessman from being a reflective and a questioning person because his attention is on making money. 4. Profit motive promotes self-interest rather than common good.
Commercial Banks do not have any profit motive.
Profit is the basic motivation for any business, but it has to be tempered with humanity, respect and ethics. There's a real danger for allowing businesses to run purely based on the idea that more is better.
Is making profit a bad thing? No, it's good, as when you make a profit you are earning more than the expenses to sell it. The advantages of profit are: Increase retained earnings.
What is the root of greed?
Greed comes from the Old English grædig, or "voracious," which means "always hungry for more."
Profit Motive. The profit motive is an economic concept which posits that the ultimate goal of a business is to make money. Economic Value. measure of the benefit that an economic actor can gain from either a good or service. Monopoly.
Abstract. The profit motive refers to what is generally taken to be the underlying motivation of business and commercial activity: to collect revenues in excess of costs or, more simply, to make money.
A motive is the reason WHY you do something. For example, a motive for exercise is better health and weight loss. In criminology a motive is the reason an individual committed a crime or offense. For instance, the motive for someone who robbed a store is most likely that they needed money.
profit seeking; profit motive; love of lucre; love of gain; pursuit of gain; pursuit of profit.
The profit motive makes theatre become pedestrian. While individuals may recycle out of the goodness of their hearts, businesses need a profit motive.
Profit motive: people are free to risk any part of their wealth in a business venture. Competition: the struggle among sellers to attract consumers with the best products at the lowest prices.
