Profit and why it is important

Published: 2022-03-31 10:55:34
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In any business that is operating currently, profit is identified to be one of the significant concepts that any business should attain. Profit is recognized as the financial reward or returns that an entrepreneur or a firm aims to achieve to reflect the kind of risk that they are taking (Ahmed, 2017). Provided that most entrepreneurs and firms are investing to achieve a return, the profit that is achieved by a business is important in measuring the success of an investment. It is important to note that success of a business is dependent on the ability to achieve profits, with profit is identified by minus of the company's revenue to that of the company's expenses.

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For a business, earning a profit is significant since profitability has a great impact as to whether a company can attract investors or receive financing from a bank to expand its operation. Any company that is operating a business cannot remain to do business without making profits. Additionally, profit is also recognized as a significant source of finance for any business with retained profits forming part of the significant source of finance for any company. Ideally, the moment any product is sold out for more than the original cost for the same product, the then the profit earned can be then reinvested.

Corporate social responsibility

In the business today corporate social responsibility is identified as one of the developing and a serious business issue. According to Yakovleva, (2017), corporate social responsibility is identified as a business approach that is put in place to contribute to the sustainable development by delivering social, environmental and economic benefits for all the shareholders. Being that social responsibility is a vast subject that focus on addressing various and many topics such as corporate governance, environmental conservation, contribution to economic development, safety and working condition, the movement aimed at encouraging companies to operate with the awareness that their business has a great impact on the society in general; including the environment and their stakeholders. One of the great aspects of corporate social responsibility is environmental sustainability; an example is Unilever Corporation in the beverage and food sector that has one of the most comprehensive corporate social responsibility strategies. The company has been ranked number seven an among the global one hundred most sustainable corporations in the world .the company has mostly focused on giving back to the society and differentiating their products as being economical, environmentally and socially.

Different organizations have built different grounds when it comes to building a greater understanding of corporate social responsibility. However, they are sharing common grounds on the basis that corporate social responsibility can be at times considered nonprofit making an effort and it is still viewed to be voluntary. That every corporation can decide to do for the society or employees as a whole, however, after using every community resources to make the profit, it is always in order and right to give back to that community.

Concerning the general profit achieved by a firm, some of the advantages that an organization can achieve by adopting a corporate responsibility is making sure that the image of the corporation is improved. The organization is directed at making profits since customers will want to procure the products they want from the corporation that is selling clean and excellent images. This, in the long run, will lead to an increase in the corporation prestige such as achieving a high level of goodness and reliability. On the other hand, since individuals want to be associated with the most popular and the best, the corporation then rises in stature and start milking profits from the customers.

Corporate social responsibility increases employees retention and improves the general attraction. Companies with CSR are finding it much easier to recruit and keep their workers. Employees are always passionate to work with the organization hence are productive to bring more profit into the organization. Since corporate social responsibility is the most responsible means of doing business, it prevents hostility that is developed by the regulatory authorities hence focus on doing business peacefully. On the other hand since positive publicity is always good publicity, most companies that have developed a proper CRS have developed the principle of good publicity, and in the long run, they gain more shares than their competitors.

According to Friedman who is one of the greatest critics for social responsibility, it has always been demonstrated that the company main aim is profit making and if any case the company forgets that then they can't remember their main responsibility of pleasing the shareholders. Comparatively, Corporate social responsibility is identified as some of the various factors that affect the organizational profitability, and in the current competition, the concept of corporate social responsibility has hence changed to become one of the important strategies that have been popular in the market environment of a cutthroat. In most situations where customer preferences and market dimensions have turned out to be unpredictable, then corporate social responsibility can play a significant role in coming up with such conditions. However, most managers are still not aware of corporate social responsibility approach is essential and if it is beneficial to them(Charif, 2017). This has done most business to put fewer efforts in adopting CSR.

Comparatively, with a close record and examples of companies that have adopted corporate social responsibility, Unilever as a firm that has adopted a proper CSR is being publicized, and the company is seriously trending for the better. Unilever Company is working with profit at the end goal as to why they are incorporating corporate social responsibility into their system. Through the adoption of corporate social responsibility, what has turned out is that now the investors are viewing the company as responsible and hence have managed to attract most investors who now want to invest with them. In the long run, the companies have worked hard to reduce various risks and are now addressing the stakeholders concern (Jung and Lee2017). However, benefits from implementing CSR can be less evident than the overall profitability. However, it helps in keeping the environment safe and manageable for future business.

For corporations that have seriously worked hard to adapt their corporate social responsibility, that's going beyond the norm of something else in common; it always their tendency to achieve high profit in the long run. On the other hand, economic advantage is gained by greatest firms in the countries with the weaker institution and weaker governance demonstrating that incentives for this organization tend to excel in adopting corporate social responsibility and ends up disclosing information that pertains to their organizational social behavior.

Bibliography

Ahmed, S., 2017. Effective non-profit management: Context, concepts, and competencies. Routledge.

Charif, M., Ferhat, S., Bernard, P. and Plaisent, M., 2017. Corporate Social Responsibility a Tool in Building Sustainable Relationships with Customers. DEStech Transactions on Economics, Business and Management, (iceme).

Jung, J.C. and Lee, K.P., 2017. Host Country Sourcing of Multinational Enterprises: A Corporate Social Responsibility Perspective. Journal of Business Ethics, pp.1-19.

Yakovleva, N., 2017. Corporate social responsibility in the mining industries. Routledge.

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