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Essay / Research Paper Abstract
This 10 page paper looks at the management model of Baumol and sales revenue maximization. The model is considered in the context if modern business and assessed for its usefulness by looking at the way it could be used to determine output and prices. The bibliography cites 7 sources.
Page Count:
10 pages (~225 words per page)
File: TS14_TEbaumodel.rtf
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Unformatted sample text from the term paper:
the equilibrium model of supply and demand, but the reality is that few markets are perfect, and while firms are impacted by supply and demand pricing and output decision are
far more complex than this. One management theory that can be seen to be useful in terms of the way that output and pricing are determined is that of William
Baumol, whole not used a great deal today, pushed aside for more aggressive and up to date models this can be a very useful model that explains where some other
approaches fail to explain. Businesses exist with the aim of making a profit, they may have a balanced approach where stakeholder models are adopted, or they may have a
predominantly shareholder approach, but they need to make money in order to survive. Firms that do not make a profit do not survive in the long term. The short term
approach seen in the stock markets and the way that shareholders want short term profits has lead to the assumption of the profit maximization model.
However, it may be argued that many firms managers may not always pursue a profit maximization strategy. Where managers are following their own goals they may support
the growth of profit, but there may be variance in the way that they support profit creation. There are three possible strategies which can be adopted as alternatives to profit
maximization; sales revenue maximization, managerial utility maximization and corporate growth maximization (Nellis and Parker, 2000). To consider the value of Baumols model we need to look at the model of
sales maximization These three different models have some common assumptions; they all reject the simple profit maximization approach and instead adopt a different object as a business model. The targets
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