Is profit maximization a valid financial objective for the company that you work for? Discuss.

The answer is yes for the company I had worked for (detailed information about this company is in the answer for Question 12 of this Unit). In year 2010, the company set objectives, which included increasing revenue from twenty five million US dollar to forty million US dollar; maintaining the average earning per minute at 0.1 US dollar; reducing average cost per minutes from 0.06 to 0.04 US dollar; expanding production lines from 18 lines to 30 lines. To achieve the first objective about increasing revenue, the company had grown with their current Buyers with the existing Departments and Divisions already in business (increase their sales by increasing number of styles and volumes), and explored the new business opportunities and expanded with existing buyers on their other Departments, Divisions & categories. They had also taken action by offering capacity to current buyers with other divisions. For the second objective, they had worked with new fabric mills to get competitive fabric price on new fabric developments that could offer better price and service than the existing suppliers. They had promoted centralized purchasing for common items (shoulder tape, tricot, interlining etc.) andcontrolled fabric price increase within 3% season to season. Furthermore, they had utilized stock fabric/ accessories to optimize CM. About the third objective, the company had focused to increase the output by applying new technology and machinery to earn marginal revenue from additional products. At this point profit is maximized. However, this company also set other objectives, which focused on developing its people through increase training budget and higher target for individual performance.

Reference: Paul G. Keat& Philip K.Y. Young, Managerial Economics, Economic tools for todays decision makers, 6th edition, Pearson International Edition, 2009 GyanPrakash Singh, Examine critically profit maximization as the objective of business firmeven if profit maximization is the most important objective what is the revelation of other alternative business objectives?, http://wiki.answers.com

What firm do you work for? What do they do -- product or service provided? What are the three basic economic questions that any firm must answer? How did the firm you work for answer these? Be specific! I had worked for Fashion Garments Ltd. (FGL),which is a 100% foreign investment company, joining venture by Hirdaramani Group of Companies of Sri Lanka and Lollytog Apparel of USA, established in Dong Nai Province, Vietnam in 1994, one of the pioneering apparel exporters in Vietnam. As sister company of Hirdaramani Group, which brings in 50 years of garment manufacturing knowledge and 17 years of valuable experience in operating in Vietnam, Fashion Garments Ltd. is confident to serve their customers. To answer the first question what products should be produced? of three basic questions, FGL decided to develop their products from uniforms at the beginning first ten years to children wears and casual fashion wear to adapt the market of the last seven years. For the second question how should these products be produced?, in a very active fashion industry, Fashion Garments Ltd. was seeking to promote their products and services in a way that conveys authenticity and integrity to expand and promote their business. The intention is to attract highly qualified customers who have made an emotional connection with what is

being offered. They havesupplying the quality of the product which customer requires which are providing correct colors, fabric according to the trend of the each season. Apparel business is very price sensitive and migratory among different continents of the world, Fashion Garments Ltd. has to reinvent the supply chain, technology to reduce the cost of manufacturing to stay relevant. For whom should these products be produced? It is in apparel business which is primarily customer driven. Their customers are retailers who will in return sell to end customers, so they have to align itself to cater to retailers needs. And the end customers look at clothing, which is fashionable, affordable, and with high quality which will be Price, Speed and Quality for Fashion Garments, thats how they communicate their values to employee. Also 65% of Fashion Garments products are children wear which are demanded proper quality and safety parameters. For that their top management has to drive the business in order to stay relevant to their customer so that keeping up the market share of the business. In fact, historically, their customers used to buy only two seasons per year, and then started buying four seasons per year, and now they are starting to order six seasons per year. Now, Fashion Garments Ltd. is proud to be called a model factory by their customers who are Adidas, Decathlon, ANF, Oshkosh, The Children Place, Reference: Paul G. Keat& Philip K.Y. Young, Managerial Economics, Economic tools for todays decision makers, 6th edition, Pearson International Edition, 2009 P. Kotler, K. L. Keller, 13th edition, Marketing Management, Pearson International Edition

http://fashiongarments.com