Long-term maximization of profit is often one of the main goals of enterprises. Other main goals are among other things enterprise preservation, economy and long-term single customer connection.

A concrete goal

The actual goal of the enterprise is however more exactly the long-term maximization of profit and/or profit optimization to thus gain during a long period as high a profits with view of long-term enterprise preservation as possible. If an enterprise liked to achieve a maximum profit as at short notice as possible, it only the sales to aim at.

Reasons, consequences and developments

Particularly the demands made against quoted enterprises (among other things quarter conclusions) make aiming at more difficult the goal of lasting, healthy managing. In the USA for a long time the business activities at the fastest possible maximization of the Shareholder VALUE (the enterprise value for the shareholders) are aligned. Although in Germany still the principle of the Stakeholder VALUE is preached (thus the increase of the enterprise value for all at the enterprise taken part one including the coworkers), aligns themselves ever more internationally acting companies at this maxim.

At the stock exchange a constant pressure prevails to submit at the end of each quarter improved enterprise numbers in order to positively affect the share quotation for the shareholders. In addition the enterprises must meet the danger of a short term assumption by their own economic stabilization. Both circumstances often lead to the softening of long-term strategies and to the task of a healthy economic development of the enterprises. The only well-known quoted enterprise in Germany, which still rejects quarter conclusions, is those Porsche AG. In the last years many large-scale enterprises gained record gains and announced often nevertheless to diminish jobs. This step is usually justified with the necessity for a stabilization, in order to work against a threatening hostile takeover. However in this argumentation often outside it is forwards left that enterprise with exzellenten reference numbers attractiveness for an assumption is often still increased.

First the described policy meets the employees (main the memo forties). In the release of coworkers the largest short term Einsparungspotenzial lies. The personnel expenditure constitutes the by far largest part of the costs with an enterprise. Besides enterprises from countries with high labour costs shift whole personnel-intensive divisions into low wage countries (Offshoring), in order to press the personnel expenditure still further.

There are however also enterprises, which had to again revise their short-sighted procedure, because they dismissed their precious mental know-how, thus the experienced coworkers, or because in low wage countries within a short time the high product quality desired could not be carried out. These two points caused usually higher costs than savings realized before for the enterprises.

Only recently a spreading found investment form high in Europe, which usually places the short term maximization of profit as an only goal into the center of the investment, originating from the USA, are the so-called private Equity funds. Private Equity companies buy up enterprises, in order to resell it after radical restructuring measures after few years with maximum profit.

Formulas for maximization of profit

The profit is the difference between proceeds and the costs, i.e. G = E - K. the profit maximum at the point at that border proceeds (E') equal the neighbouring costs (K') is, thus at the E' = K' applies. From G' = E' - K' results the fact that the border gain (G') at this point 0 is, i.e. G' = 0 applies. G' = 0 also a local minimum could be present, the condition G' = 0 is formally therefore necessary, but not sufficient in the point. In the point G' = 0 must apply further for G " < 0 (G " is the second derivative of G) around a local maximum to formally guarantee (G " < 0 is a sufficient condition for a local maximum).

Example:

The price paragraph function is given

p (x) =150 \ frac {x} {20}

and a linear cost function

K (x) =20000+30 \ cdot x

From it results

E (x) = p (x) \ cdot x = 150 \ cdot x - \ frac {x^2} {20}

E'(x) = 150 - \ frac {x} {10}

G (x) = E (x) - K (x) = (150 \ x cdot - \ frac {x^2} {20}) - (20000 + 30 \ x cdot)

G'(x) = 150 - \ frac {x} {10} - 30 = 120 - \ frac {x} {10}

G'(x) = 120 - \ frac {x} {10} = 0 => 1200 - x = 0 => 1200 = x

G (1200) = (150 \ 1200 cdot - \ frac {1200^2} {20}) - (20000 + 30 \ 1200 cdot) = 52000

p (1200) =150 \ frac {1200} {20} = 90

With 1200 quantity units the profit maximum is reached at a value of 52000 monetary units. The cost per quantity unit amounts to thereby 90 monetary units.

The condition that G is " < 0, is in this case always fulfilled, there

G '' (x) = - \ frac {1} {10} => G '' < 0 for all x \ epsilon \ RH

See also: Collection of formulae economics

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