Ways to improve profitability are contrary to the public interest

For a private company, the priority is to get as much profit as possible. This is an axiom characterizing the state of the modern economy. When the company claims that in addition to profit, it is concerned about the state of the environment, image and other things - this means that they care only in the context of increasing profits. Companies that allow themselves not to think about profits, but care about the good for society, are not able to withstand the tough pressure of competition and leave the market.

To increase the same profit, all means are good. This means that ways to increase profitability often go against public goals. Profitability is the most important indicator for the company. It shows the ratio of income from sales of goods or services to expenses. Thus, this indicator can be improved if, other things being equal, incomes rise, or expenses are reduced.

A private company can not but look for ways to improve profitability, since profitability is not only directly related to profit, but is also the simplest and most reliable way to increase it. The company is not always able to increase the volume of production of goods, because: firstly, its resources are limited, and secondly, it is not so easy to take market share from competitors. On the other hand, you can increase profitability almost indefinitely. And it turns out that a company that produces a very limited number of products at low costs, can count on fabulous profits. What, by the way, we can observe in the example of trading luxury cars by hand assembly.

Let's see how companies manage to improve profitability, and how much it correlates with the public interest. For starters, let's take the ways to improve the profitability of sales. All the technologies of successful sales boil down to making the buyer buy something that is not really of high value. For this purpose, advertising, which inspires the buyer, perfectly copes, that the goods purchased by him are really necessary for him. In addition, the company's image plays a significant role.

Anyway, the high profitability of sales can be explained only by deceit of the buyer. After all, he pays rather not for a product, but for "air": some associations associated with a product that were inspired by advertising, the name of the company or the helpfulness of its personnel. It is unlikely that such ways to improve profitability are beneficial to the development of the economy or entail the improvement of public welfare, although no one really aspires to do so.

If we analyze ways to improve the profitability of production, Then here we will notice even more unpleasant consequences. The company, in fact, can choose only two main ways to reduce its production costs. The first way is to save on the labor force. That is, to reduce wages, retaining the previous amount of work performed by employees, or to load employees with additional work without raising their salaries. Usually, for these purposes, various tricks are used, which reduces the degree of people's satisfaction with work.

The second way, saving on raw materials and materials, hits the buyer more likely. Together with the decrease in the cost of raw materials from which the product is made, its quality, and hence the quality of the finished product, also decreases. In this case, since no ads are made by the company, the buyer thinks that he purchases goods of the same quality as before.

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