Profit orientation
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Profit orientation refers to a company or organization's focus on making a profit, or financial gain, as its primary goal. This can include actions such as cutting costs, increasing revenue, and maximizing efficiency in order to increase profits. Profit orientation is often considered to be a key aspect of capitalist economic systems, and is often seen as a driver of economic growth and development. However, some critics argue that an excessive focus on profit can lead to negative consequences, such as exploitation of workers, environmental degradation, and a lack of focus on social and ethical considerations.
Examples of profit orientation
There are many examples of companies or organizations that have a strong profit orientation. Some examples include:
- Walmart: This retail giant is known for its focus on low prices, which is achieved in part by keeping costs low through practices such as paying workers low wages and sourcing products from low-cost suppliers.
- Amazon: Amazon is known for its focus on efficiency and innovation, which has enabled the company to become one of the most successful retailers in the world. The company uses data analysis to optimize its operations, and has invested heavily in technology such as automation and drones in order to improve efficiency and reduce costs.
- Coca-Cola: This global beverage company is known for its strong marketing and branding efforts, which have helped to increase sales and profits.
- ExxonMobil: This oil and gas company is one of the largest and most profitable companies in the world, and is known for its focus on maximizing production and profits.
- Goldman Sachs: A global investment bank and financial services company, known for its focus on making a profit through investment banking, securities trading, and other financial services.
These examples of companies are not necessarily good or bad examples but they all have a strong focus on making a profit, which is the main characteristic of a profit oriented company.
Advantages and disadvantages of profit orientation
Advantages of profit orientation include:
- Motivation for innovation: Companies with a strong profit orientation are motivated to find new and efficient ways to produce goods and services, which can lead to innovation and progress in the industry.
- Job creation: Companies that are focused on making a profit are more likely to expand their operations and create more jobs.
- Economic growth: A strong profit orientation can lead to an increase in economic growth as companies invest in new technologies, expand their operations, and create new jobs.
Disadvantages of profit orientation include:
- Exploitation of workers: Companies that are focused on making a profit may cut costs by paying workers low wages or by providing poor working conditions.
- Environmental degradation: Companies that prioritize profit may engage in practices that harm the environment in order to cut costs or increase production.
- Lack of social responsibility: Companies that are focused on making a profit may neglect their social and ethical responsibilities to employees, customers, and society as a whole.
- Short-term focus: Profit orientation can lead companies to prioritize short-term gains over long-term sustainability.
- Income inequality: A strong profit orientation can lead to an increase in income inequality as wealth is concentrated among a small group of people or companies.
Suggested literature
- Shahriar, A. Z. M., Schwarz, S., & Newman, A. (2016). Profit orientation of microfinance institutions and provision of financial capital to business start-ups. International Small Business Journal, 34(4), 532-552.
- Kelli, A., Mets, T., Jonsson, L., Pisuke, H., & Adamsoo, R. (2013). The changing approach in academia-industry collaboration: from profit orientation to innovation support. Trames: A Journal of the Humanities and Social Sciences, 17(3), 215.
- Baptista, N., Pereira, J., Moreira, A. C., & Matos, N. D. (2019). Exploring the meaning of social innovation: A categorisation scheme based on the level of policy intervention, profit orientation and geographical scale. Innovation, 21(3), 379-397.
