Profit maximisation is when firms maximise their profits through sales and increasing the price of products. Profit maximisation occurs when total sale revenue is furthest above total cost which is when MR= MC. Firms are usually controlled by the managers, in order for managers to keep its position its must gain enough or maximise the firms’ profits, so it can satisfy the shareholders. However managers may want to take a different approach rather than maximising the firms’ profits. Managers may want to maximise managerial objectives such as maximising its sales rather than profits. However although they are taking a different approach, they still must gain enough profits to satisfy the firms’ shareholders in order to avoid losing their jobs.
Managers may want to pursue the objective of making a more ethical and greener environment. In a firm, there are many shareholders who have different views on what the company should be doing, these shareholders form coalitions. The manager may try to resolve conflicts between different interest groups in different organisations. However, attempting to satisfy the aspiration of as many groups within the organisation as possible would mean compromise and the possible of setting minimum rather than maximum targets. Therefore manager may try the method of satisficing. Satisficing means achieving objectives that are acceptable to all the competing member groups of the coalition. This concept is only used when firms are in an imperfectly competitive market such as a monopoly which is protected by barriers to entry. So in this situation, the manager may content themselves with satisfactory profits, rather than maximising, combined with unnecessary costs that are used to achieve a greener and more ethical goal. For companies such as Tesco, which is also going for a greener approach, they are trying to go green by offering savings