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# QOTD #41 The main purpose of business is to maximize shareholder value

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QOTD #41 The main purpose of business is to maximize shareholder value  [#permalink]

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08 Jan 2018, 16:36
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58% (01:39) correct 42% (01:57) wrong based on 240 sessions

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The main purpose of business is to maximize shareholder value over the long term by selling goods or services. Thus, employees who use funds for anything other than to increase their sales are simply cheating the shareholders.

Which of the following is an assumption made in drawing the conclusion above?

(A) Most business owners would agree with the above definition of the purpose of a business.
(B) Increasing sales is not the only way to maximize shareholder value.
(C) Spending money on making the workplace more comfortable for employees will not lead to increased worker productivity and in turn increased business profits.
(D) The only function of a business is to maximize returns for its shareholders.
(E) According to this definition, many employees could be accused of cheating.

Kudo for the right solution and explanation

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Re: QOTD #41 The main purpose of business is to maximize shareholder value  [#permalink]

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08 Jan 2018, 18:16
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I think B is the best fit.
A,c,e are out of scope.
D seems extreme.
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QOTD #41 The main purpose of business is to maximize shareholder value  [#permalink]

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Updated on: 08 Jan 2018, 18:44
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carcass wrote:

The main purpose of business is to maximize shareholder value over the long term by selling goods or services. Thus, employees who use funds for anything other than to increase their sales are simply cheating the shareholders.

Which of the following is an assumption made in drawing the conclusion above?

(A) Most business owners would agree with the above definition of the purpose of a business.
(B) Increasing sales is not the only way to maximize shareholder value.
(C) Spending money on making the workplace more comfortable for employees will not lead to increased worker productivity and in turn increased business profits.
(D) The only function of a business is to maximize returns for its shareholders.
(E) According to this definition, many employees could be accused of cheating.

Kudo for the right solution and explanation

IMO - C

Stem - Main purpose of business - Maximize shareholder value by selling goods and services
Employees must spend funds on increasing sales only else they are cheating shareholders.

Option A - Stem talks about shareholders not mention of the business owners.
Option B - Stem assumption is opposite.
Option C - I will hold it as stem assumes only way to maximize returns for shareholders is to increase sales
Option D - Stem talks about the purpose of a business function. Two very different things.
Option E - Irrelevant.

Will wait for OA.
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Originally posted by lostin on 08 Jan 2018, 18:22.
Last edited by lostin on 08 Jan 2018, 18:44, edited 1 time in total.
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Re: QOTD #41 The main purpose of business is to maximize shareholder value  [#permalink]

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08 Jan 2018, 18:37
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IMO C

(A) Most business owners would agree with the above definition of the purpose of a business. :
CANNOT CHALLENGE THE FACTS STATED IN PREMISE

(B) Increasing sales is not the only way to maximize shareholder value.:
OUT OF SCOPE TO DISCUSSION

(C) Spending money on making the workplace more comfortable for employees will not lead to increased worker productivity and in turn increased business profits.:
CORRECT. THIS CHOICE DEFENDS AGAINST A WEAKENER.

(D) The only function of a business is to maximize returns for its shareholders.:
SAME AS B

(E) According to this definition, many employees could be accused of cheating.:
IRRELEVANT TO CONCLUSION

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QOTD #41 The main purpose of business is to maximize shareholder value  [#permalink]

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Updated on: 08 Jan 2018, 22:18
1
The main purpose of business is to maximize shareholder value over the long term by selling goods or services. Thus, employees who use funds for anything other than to increase their sales are simply cheating the shareholders.

Which of the following is an assumption made in drawing the conclusion above?

(A) Most business owners would agree with the above definition of the purpose of a business. Out of scope for an assumption
(B)Increasing sales is not the only way to maximize shareholder value
weakening the conclusion
(C) Spending money on making the workplace more comfortable for employees will not lead to increased worker productivity and in turn increased business profits.
-spending money in this case is helping the business,not the shareholders. So, such employees are cheating the stakeholders. CORRECT
(D) The only function of a business is to maximize returns for its shareholders. And Irrelevant to the conclusion
(E) According to this definition, many employees could be accused of cheating. Out of Scope
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Originally posted by TaN1213 on 08 Jan 2018, 19:39.
Last edited by TaN1213 on 08 Jan 2018, 22:18, edited 2 times in total.
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QOTD #41 The main purpose of business is to maximize shareholder value  [#permalink]

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08 Jan 2018, 22:10
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Its C.
Assumption: increasing sales is the only way to increase shareholder values.
B is the complete opposite to this assumption.
C says this in other way that other methods of increasing sales will not work. Also, negating this choice makes the argument to fall apart.
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Re: QOTD #41 The main purpose of business is to maximize shareholder value  [#permalink]

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12 Jan 2018, 02:50
The main purpose of business is to maximize shareholder value over the long term by selling goods or services. Thus, employees who use funds for anything other than to increase their sales are simply cheating the shareholders.

Which of the following is an assumption made in drawing the conclusion above?

(A) Most business owners would agree with the above definition of the purpose of a business.
(B) Increasing sales is not the only way to maximize shareholder value.
(C) Spending money on making the workplace more comfortable for employees will not lead to increased worker productivity and in turn increased business profits.
(D) The only function of a business is to maximize returns for its shareholders.
(E) According to this definition, many employees could be accused of cheating.

Hi,
"Thus, employees who use funds for anything other than to increase their sales are simply cheating the shareholders. "
Premise:-
"The main purpose of business is to maximize shareholder value over the long term by selling goods or services"

Let's do some pre thinking before starting with the POE.
Acc. to the argument employees using funds for anything other than increasing sales will not indirectly help in increasing the sales.

D is exactly in line with this and hence the answer.
Re: QOTD #41 The main purpose of business is to maximize shareholder value &nbs [#permalink] 12 Jan 2018, 02:50
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