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Which of the following best describes the managerial view on the purpose of business?

a.A business framework where the job of top managers is to produce the highest possible stock market valuation of the firm's assets
b.A business framework that attempts to organize and analyze multiple groups that interact with the firm
c.A business framework where organizational structure is based on fit between the organization and various aspects in its environment
d.A business framework where the firm is seen as a mechanism for converting raw materials into products to sell to customers

User Lithis
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1 Answer

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Final answer:

The managerial view on the purpose of business can involve maximizing shareholder value, balancing the interests of all stakeholders, ensuring safety, and efficiently operating within market structures. Options provided describe different frameworks for understanding a firm's objectives, from shareholder primacy to stakeholder theory and organizational structure.

Step-by-step explanation:

The question asks which of the given options best describes the managerial view on the purpose of business. The managerial view on the purpose of business can be related to the theory of the firm, which explains how businesses operate. A firm, which combines various inputs to create valuable outputs, is at the core of this theory. The purpose of a business within the managerial view could encompass various aspects such as generating profits for shareholders, taking into account the interests of all stakeholders, ensuring workplace safety, and operating within market structures.

Regarding the options provided, option (a) aligns with the concept of shareholder primacy, which holds that managers should act in the best interests of shareholders to maximize stock market valuation. Option (b) could describe a stakeholder theory approach, where managers are mindful of different groups that have a stake in the company. Option (c) might be related to the contingency theory of organizational structure, looking for a fit between the organization and its surrounding environment. Lastly, option (d) provides a basic description of what a firm engages in from a production standpoint without delving into the managerial purpose behind it.

User Anoush Hakobyan
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