Question

Consider your organization or one with which you are recently familiar and analyze it in terms of the theory of the firm in use there. Furthermore, analyze it in terms of its current business model activities and the decision processes that drive it. It is important to use the terminology and concepts of the readings in your answer to help create a common language in the discussion. This can be a complex area of discussion and using the same terms and concepts accurately will enable a healthy, efficient discussion. 


Answer 1

Answer:

Given that:

The theory of firm (in the neoclassical sense) states that a firm exists in order to maximize its profits. My firm is a consultancy firm that provides equity research services.

Clients of my firm include institutional investors as well as retail investors, investing money in the stock market.

Now, my organization is not a believer of maximizing profits. Rather the theory of firm in use focuses on the long term motivations like maximizing market share, maintaining sustainability and enhancing client utility.

My organization believes that profit maximization is a short term motivation and by focusing on the long term motivations, profit maximization will automatically happen.

In terms of current business model activities, my organization focuses on its niche capability. There are several equity research and consultancy companies in the market but my organization differentiates itself by focusing only on the capital goods industry.

The decision process that drives it is based on the objective to attain realistic goals and not on maximizing profit at the cost of losing competitiveness and ability to generate utility for its clients.