Q. Illustrate about Sales maximisation?
The concept that business firms (specifically those operating in the real world) are principally goaded by the aspiration to achieve the greatest possible level of sales, in place of profit maximisation needs due consideration. On a daily basis, most real world firms perhaps do try to maximise sales in place of profit. For firms operating in relatively competitive markets, facing relatively fixed prices and relatively constant average cost then increasing sales is bound to increase profits as well.
Sales maximisation theory is an alternate theory to profit maximisation. W.J. Baumol (Economic Theory and Operations Analysis, 1965) is normally recognised as having first suggested that firms frequently seek to maximise the money value of their sales which implies their sales revenue, subject to a constraint that their profits don't fall short of some minimum level that is just on the borderline of acceptability. Or we can say so long as profits are at a satisfactory level, management will devote its efforts and energy to the expansion of sales. Such a goal can be explained perhaps by the businessman's desire to maintain his competitive position that is partly reliant on the sheer size of his enterprise. This goal can also rise out of management's vested interest because the management's salaries may be related more closely to size of the firm's operation than to its profits or it may simply be a matter of prestige. It's also Baumol's view that short-run revenue maximisation can be consistent with long-run profit maximisation and revenue maximisation can be regarded as along-run goal in several oligopolistic firms. Baumol also reasons that high sales attract customers to popular products.