Glamor Economics

Chapter 61

Chapter 9 An Account Behind Profit——Production and Cost
Section 1 Why Many Enterprises Get Together in Real Estate——Profit Maximization
With the reform and opening up and the government's macro-control, the real estate industry has gradually become a popular industry.Haier, Lenovo and many other famous enterprises in the manufacturing and IT industries have entered the real estate industry one after another.

Haier Real Estate Group, established on April 2002, 4, is a subsidiary of Haier specializing in real estate investment, development and operation.Established in 15, Raycom Land is a wholly-owned subsidiary of Legend Holdings Co., Ltd. investing in the real estate industry. Its predecessor was Legend Technology Park Company established in 2001.

Rongke Land Real Estate Development Co., Ltd. is a subsidiary of Rongke Holdings. It is a large-scale professional real estate development enterprise specializing in the development of mid-to-high-end residential, office and commercial properties across the country.Relying on Lenovo's capital, management, brand and cultural advantages, Raycom Land Real Estate Development Co., Ltd. has successively entered Beijing, Tianjin, Chongqing, Wuhan, Changsha, Hefei, Yixing, Wuxi and other central cities, developing products including apartments, garden houses, villas And other types, with a total area of ​​nearly 200 million square meters, the products are well received and won many honors.

The emergence of Haier Real Estate Group and Raycom Land is a symbol of many companies entering real estate.According to a survey released by the China Industry and Enterprise Information Release Center in 2007, as of November of the same year, there were 11 real estate development companies in my country, with 58710 million employees.For many companies whose main business is not real estate, their real estate profits greatly exceed their main business income. Youngor's 160.1 real estate income was 2006 billion yuan, far exceeding the sum of the net profits of its suit and shirt businesses.

From an economic point of view, it is easy to explain the phenomenon of many enterprises entering real estate.The reason why many enterprises get together in real estate is that apart from external environmental factors such as the deterioration of the investment environment and the economic crisis, profit maximization is the most important reason.Profit is an important driving force and pillar for the survival and development of an enterprise.

1.Profit is the driving force for entrepreneurs to start a business

A producer, also called a firm, refers to a single economic unit that can make a unified production decision.Including personal, partnership and corporate forms of business organization.The manufacturer is assumed to be a rational economic person, and the purpose of providing products is to pursue the maximum profit.A person who has the opportunity to start his own business can also continue to work for others and receive a fixed salary.So what inspired him to start a business with his own hard work and risk bankruptcy?The incentive is that if the business is doing well, he will be able to make a profit.No one wants to risk giving up a steady job to start their own business without the incentive of a potential profit.

2.In order to maximize profits, producers will continue to expand production
Manufacturers engage in the production or sale of goods not only to obtain profits, but also to obtain maximum profits. The principle of profit maximization for manufacturers is the principle that the marginal revenue of output is equal to the marginal cost.If the marginal benefit of increasing one unit of output is greater than the marginal cost, it means that increasing output can increase total profit, so the manufacturer will continue to increase output to achieve the maximum profit goal.

3.The higher the profit margin of an industry, the more producers will flood in
Profit rate is a relative indicator. Generally, the total profit is compared with the index of the same period, such as: cost profit rate = total profit / total cost; sales profit rate = total profit / net sales income; capital profit rate = total profit / Total capital; per capita profit rate = total profit / average number of employees.Generally speaking, the greater the rate of profit growth, the better the benefits.The greater the profit margin of an industry, the more and more producers it will attract.

4.The better the profit of the enterprise, the more diligent work is required by the producers
Profit is closely related to the sales process and management process. If an enterprise wants to obtain the maximum profit, producers must work hard, strengthen management, and increase profit margins.Profit maximization is always an important goal pursued by enterprises.

[links to related words]

Profit maximization Manufacturers engaged in the production or sale of goods not only require profit, but also the maximum profit. The principle of profit maximization for manufacturers is the principle that the marginal revenue of output is equal to the marginal cost.

(End of this chapter)