For a private company, the priority is to get as much profit as possible. This is an axiom that characterizes the state of the modern economy. When a company claims that in addition to profit, it cares about the environment, image and other things - this means that they care only in the context of increasing profits. Companies that allow themselves not to think about profit, but care about the welfare of society, are not able to withstand severe pressure from competition and leave the market.
To increase profit, all means are good. This means that ways to increase profitability often go against public goals. Profitability is the most important indicator for a company. It shows the ratio of income from sales of goods or services to expenses. Thus, this indicator can be improved if, ceteris paribus, revenues increase or expenses are reduced.
A private company cannot but look for ways to increase profitability, because profitability is not only directly related to profit, but it is also the most simple and reliable way to increase it. The company is not always able to increase the volume of production of goods, because: firstly, its resources are limited, and secondly, it is not so easy to take market share from competitors. On the other hand, you can increase profitability almost to infinity. And it turns out that a company that produces an extremely limited number of products at low costs can rely on fabulous profits. That, by the way, we can observe in the example of trade in luxury hand-assembled cars.
Let’s see how companies manage to increase profitability, and how this relates to the public interest. To begin with, let's take ways to increase sales profitability. All successful sales technologies come down to making the buyer buy at an expensive price that does not really have much value. To this end, advertising is excellent, suggesting to the buyer that he really needs the goods he has purchased. In addition, the image of the company plays a significant role.
One way or another, a high return on sales can only be explained by deceiving the buyer. After all, he pays more likely not for the product, but for the “air”: some associations related to the goods that were inspired by advertising, the name of the company, or the helpfulness of its staff. It is unlikely that such ways of increasing profitability are beneficial to the development of the economy or entail an improvement in public welfare, although no one really claims this.
If we analyze the ways to increase the profitability of production, here we will notice even more unpleasant consequences. The company, in fact, can choose only two main ways to reduce its production costs. The first way is to save on labor. That is, to reduce wages, retaining the previous volume of work performed by employees, or to load employees with additional work without increasing wages. Usually, various tricks are used for these purposes, which reduces the degree of people's satisfaction with work.
The second way, saving on raw materials, is more likely to hit the buyer. Along with a reduction in the cost of the raw materials from which the product is made, its quality, and hence the quality of the finished product, also decreases. At the same time, since the company does not make any announcements, the buyer thinks that he is purchasing goods of the same quality as before.
As you can see, ways to increase profitability reveal certain contradictions between the interests of companies and the interests of the public. Each side behaves quite logically from its point of view, however, an acute conflict of interests makes it impossible to create a stable economic system.