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Essay / Research Paper Abstract
This 11 page paper critically evaluates the sale revenue maximization management model of Baumol, looking at what the model is and its concepts and the extent to which the managerial model of Baumol provides a useful insight into the pricing and output decisions of modern management. The low cost airline industry is used as an example to look at the concept. The bibliography cites 5 sources.
Page Count:
11 pages (~225 words per page)
File: TS14_TEsalesmax.rtf
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Unformatted sample text from the term paper:
and many of the stakeholders. Including the owners or shareholders will be unhappy with management, in addition to this jobs cannot be retained and customer supplied if the firm does
not at least break even. It is with this in mind that the idea of the profit maximization has become a popular concept in terms of business modeling. It appeals
to aspects of the behavior which appear to comply with the firms purpose. However, it may be argued that many firms managers may not always pursue a profit maximization strategy,
especially within the public sector. Where managers are following their own goals they may support the growth of it, but may vary in the way that they support a profit.
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, 2006). 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 that have been
adopted can be explained in terms of the different factors which are motivating the managers of those firms, especially where there is a separation of management control and ownership, giving
management an agency relationship which incorporates some level of freedom where some of the short term goals need not to be motivated purely by achieving short-term profit (Nellis and Parker,
2006). Baumols management model looks to the concept of sales revenue maximization. The underlying concept here is that there is likely to be a high degree of importance attached to
increasing the amount of sales which are made by a farm. The research by William Baumol, presented in 1959, is still interesting model in todays management environment. It is based
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