The ways of increase of profitability contrary to the public interest

For a private company, the priority is obtaining the greatest possible profits. It is an axiom describing the state of the modern economy. When the company claims that in addition to profit, it cares about the environment, image and other things – that means they care only in the context of increasing profits. Companies that allow themselves not to think about profits, and care about the welfare of the society is unable to withstand the hard pressure of competition and leave the market.

To increase profit is all good. So, ways to improve profitability is often at odds with public goals. Profitability   is a key factor for the company. It shows the ratio of income from sales of goods or services to the expenses. Thus, this figure can be improved if, ceteris paribus, grow revenues, or reduced costs.

A Private company can't improve profitability, because profitability is not only directly linked to profits, but also is the most simple and reliable way to improve it. The company is not always able to increase the volume of production of goods, because: first, its resources are limited, and secondly, to take away competitors ' market share is not so simple. On the other hand, to increase the profitability could be almost endless. And it turns out that the company that produces a very limited number of products at small expenses can count on enormous profits. That, by the way, we can observe on the example of trade luxury cars hand-built.

Let's look at how companies can increase profitability, and how it relates to the public interest. For a start, consider the ways of increase of profitability of sales. All the technology of successful sales boil down to, to force the buyer to buy at high prices that in reality has not much value. With this aim, copes advertising, suggesting to the buyer that purchased the item he really needed. In addition, a significant role is played by the image of the company.

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Anyway, the high profitability of sales can be attributed to a deceit of the buyer. After all, he pays rather than for the product, and for "air": some associations connected with the goods that were sent down to him is the name of the company or the helpfulness of its staff. Hardly, similar ways of increasing profitability are in favor of economic development or entail improving the public welfare, although it is special and no one claimed.

If assess ways of increasing profitability, Here we will notice even more unpleasant consequences. The company, in fact, may only elect two of the main ways to reduce their production costs. The first way – to save on labor costs. That is, to reduce wages, while the employees scope of work, or to burden the employees with additional work without increasing wages. Usually for this purpose uses various tricks, which reduces the degree of satisfaction of people the work.

The Second way, the savings on raw materials, has more buyer. Together with a reduction in the cost of raw materials constituting the product, is reduced and its quality, and hence the quality of the finished product. In this case, since no ad company doesn't, the buyer thinks he buys the goods of the same quality as before.

As you can see, the ways of increase of profitability reveal certain contradictions between the interests of companies and the public interest. Each side behaves quite logically from their point of view, however sharp the conflict of interest makes it impossible to create a stable economic system.