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Optimum Profits versus Maximum Profits

Maximum profits are the “official” goal of all business activities. Sometimes, however, business judgments are deliberately made that result in less than a maximum return. In these cases, companies seem willing to settle for optimum profits rather than maximum profits. An optimum profit is a return that is considered to be satisfactory by the managers or owners of a business. It may be lower than what is actually possible, and it is higher than the minimum return necessary to keep the company in business. An optimum profit may be the best a company can earn when operating in unfavourable economic conditions or under tough government regulations.

Social responsibility decisions may lead to optimum profits by diverting funds that otherwise could be used to drive profits close to the maximum level. For example, the drug education funds might have been used to purchase a more productive computer system.

Reading tasks

A. Understanding main points. Answer these questions:

1. Do socially responsible companies sacrifice profits by working conscientiously to promote the social good?

2. Do they make higher profits than corporations that ignore the public’s desires for a high and responsible standard of social performance?

3. What are long-run profits and short-run profits?

4. What is an optimum profit?

5. What social programs are mentioned in the text?

6. How may companies gain money, lost in the short run, back?


B. Understanding details. Mark these statements T (true) or F (false) according to the information in the text.

1. The relationship between profits and social responsibility is sequential.

2. Any social program imposes monetary costs on the participating company.

3. Money, lost in the short run, may be gained back.

4. An optimum profit is always lower than what is actually possible.

5. Maximum profits are the goal of all business activities.


Vocabulary tasks

A. Match the words with their definition:


1. profit a. something for what one is responsible
2. record b. a person having authority
3. investor c. legal expenses
4. responsibility d. money gained in a business transaction
5. executive e. an account of a fact preserved in a permanent form
6. costs f. one who invests money
7. money g. the current medium of exchange in the form of coins or banknotes.
8. judgement h. good sense

B. Complete the following sentences using words from the left-hand corner of exercise A:

1. Corporate social r__________ challenges businesses to be accountable for the consequences of their actions.

2. Many business i__________ subscribe to the idea of social responsibility.

3. The corporations’ goal of seeking p__________ has been challenged by stakeholders demands for firms to act as both economic and social entities.

4. A few farsighted business e__________ advised corporations to use their power act influence voluntary for broad social purposes, rather than for profits alone.

5. Charitable m__________ giving is not the only form that corporate social responsibility takes.

6. The c__________ to business and to society of unethical and illegal behavior are very large.

7. Their j___________ of social problem solving has not always matched their economic performance.

8. The company was losing large amounts of m__________ on its operations.

9. Political pressures produce ethical dilemmas that often demand careful j__________.

10. Business e__________ must decide on the appropriate level of political involvement for their company.


Choose one of these topics and develop it into an essay:

1. Social programs.

2. Short run and long run profits.

3. Maximum profits.

Unit 18

Date: 2016-04-22; view: 2156

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