Goals and Purpose of a Firm

Topics: Business, Entrepreneurship, Small business Pages: 3 (1137 words) Published: November 11, 2013


Goals and Purpose of a Firm

Abstract
This paper will give some insight of what the primary purpose or goal of a firm related to Milton Friedman. Profits, the surplus after the total costs are subtracted from revenues and of course after taxes are taking out will be the meaning. However, a firm and making a profit is not so cut and dry as you will see while ready my paper; society and the government has a hand in the firms staying in business so that the services and products that we take for granted can still be produced.

Milton Fried theory of the purpose of goal of every firms is to make money; that is the short answer however, every “company’s financial status has three possible outcomes: making profits, breaking even, or losing money” (Economic Logic, 2010). Every firm’s goal when gong into business is to make a profit; which translates to making profits for the shareholders and stockholders. Shareholders or stockholders are those whom own shares of stocks in a corporation or mutual fund; within a corporation along with partial “ownership which comes with the right does receive dividends and vote on certain matters related to that particular corporation/firm” (Wilcke, 1999). A “stakeholder is anyone that has an interest or is affected by a corporation. In other words, the stockholder isn’t the only party having a stake in the corporation” (Argandona, 2005). The primary goal of every firm is to make a profit over the normal money to pay for operating cost, and normal returns on their investments. All this boils down to a free society; but is everything free in this day in age? No you have to work for it. Even though Milton Fried purpose of every firm is to make a profit, making a profit is necessary for most all firms to stay in business. Selling a product or services that a customer wants or needs at a lower price then the competitors will help business make a profit. Even though a firm...

References: (2010). Economic logic. (3rd ed.). Washington, DC: Capital Press.
Vorster, N. (2010). An ethical critique of Milton Friedman’s doctrine on economics and freedom. 9(26), 163-188. Retrieved 11 November 2012 from
http://jsri.ro/ojs/index.php/jsri/article/view/31/32
Argandona, A. (2005). Firm, market economy, and social responsibility. University of Navarra, WP(600), 1-20. Retrieved 11 November 2012 from
http://www.iese.edu/research/pdfs/DI-0600-E.pdf
Wilcke, R. (1999). An appropriate ethical model for business, and a critiques of Milton Friedman. University of Business and Public Administration, 1-33. Retrieved 11 November 2012 from
http://mises.org/journals/scholar/Ethics.PDF
Pfarrer, M. (2010). What is the purpose of the firm? Shareholder and stakeholder theories. Good Business, Chapter(7), 86-93. Retrieved from
http://www.enterpriseethics.org/Portals/0/PDFs/good_business_chapter_07.pdf
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