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BUS 110: Essay
In theory, a lower-risk investment has a lower profit potential than an investment with
a higher risk. A greater-risk investment has a better probability of making money as well as
more danger of losing money. Profit is seen as a kind of compensation for taking on a variety
of business risks. Profit is a reward for taking a risk in business, according to an economic
theory developed by professor and economist F.B. Hawley (Mustafa et al.). The bigger the
potential financial advantage for a business owner, according to Hawley, the greater the
danger (Mustafa et al.). As a result, a business owner who does not have this relationship
would never take a risk in entrepreneurship since he or she would not be able to make any
more money than if he adopted the safest course of action. This economic theory also implies
that an entrepreneur cannot generate a big profit without taking risks.
On the other hand, Frank Hyneman Knight criticizes Hawley's approach to risk and
profit. He points out that a company owner or investor does not need to take risks to achieve
a substantial profit (Cowan). Risk is clearly a component of the company management and
investment process, but it isn't necessary to take on a high degree of risk in order to attain a
high level of profitability (Cowan). According to Knight, uncertainty is the genuine unknown
in business, and if an investor or business owner takes a known risk, she is not truly risking
anything (Cowan). Careful management, extensive financial analysis, and outstanding
customer service may all contribute to a successful business or investment initiative. Business
risk management teams seek to reduce the impact of risk on profitability in order to optimize
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prospective earnings. The business risk may take many forms, including equipment failure,
market demand adjustments, and lower-than-expected sales. To reduce risk, professionals
employ thorough performance estimates based on historical sales data, consumer purchase
trends, and competitor analysis.
Possibility management teams can use this information to map courses of action,
develop operational budgets, and arrange product launch dates in order to maximize
prospective revenues while reducing the risk of difficulties destroying commercial efforts.
Despite the ubiquitous sense of peril that pervades business and financial decisions, several
companies throughout the country encourage high-risk circumstances and employ people
committed to maximizing earnings for customers. Hedge fund managers, for example,
operate with millions of dollars in private investment accounts every month. Clients may lose
a considerable amount of their overall net worth due to these managers' bad investment
selections. On the other hand, smart investing judgments can result in investment rewards of
millions of dollars. This is why successful hedge fund managers are often compensated in
millions of dollars.
Businesses sell things to their customers. Costs they incur in this process include rent,
salary, materials, transportation, and a range of other expenses incurred by a corporation as a
result of generating and selling goods and services. Companies, for example, spend money on
staff, facilities, and advertising as part of their product development expenses. A business
makes a profit if it has money left over after all expenses have been paid. This may be
contingent on the risks that develop during the cost-incurring process. A corporation is
considered to be losing money when its expenditures surpass its income.
Regardless of whether they operate in the for-profit or not-for-profit sectors,
organizations require inputs in the form of resources known as factors of production in order
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to deliver goods and services. The four conventional components of development that all
economic work has in common are natural resources, human resources, capital, and
entrepreneurship. Today, many experts believe knowledge to be the fifth component in
attaining corporate success, acknowledging its significance. As a result, if the production
elements are employed properly, and there is less risk in acquiring the resources, a
corporation may create more goods and services and earn more profits with the same
resources.
How Businesses and Non-profit Organizations Can Raise the Standard of Living for All
A business is an entity that generates revenue by supplying goods and services that
consumers desire. Businesses that provide medical care, autos, and a range of other goods
and services meet the demands of consumers. Businesses, for example, generate physical
things such as laptops. Business services are intangible items that cannot be touched, held, or
kept. Doctors, attorneys, hairstylists, car washes, and airlines all provide services. Businesses
also supply hospitals, shops, and governments with machinery, resale products, computers,
and tens of thousands of other commodities.
Non-profit organizations, on the other side, are those that do not make any money for
their owners. Instead, the money received by the organizations is donated to assist in
supporting the organizations' aims and purposes (Nageswarakurukkal et al.). A non-profit
organization may also rely on accepted donations to keep afloat (Nageswarakurukkal et al.).
There are a plethora of organizations and charities that aid people and communities in need.
These organizations are commonly referred to as not-for-profits. Businesses and non-profit
organizations contribute to the creation of goods and services that support our way of living,
thus raising the standard of living for all. Businesses play a vital role in controlling our lives
by providing jobs, products, and services to society. Non-profit organizations do not exist for
the purpose of making a profit; instead, they believe in assisting the poor, and this is an
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outstanding example of how non-profit organizations may improve the standard of life for
everyone.
Businesses and non-profit organizations create the commodities and services that
enable us to live comfortably. A country's level of life or living standards is determined by
the output of products and services that people may purchase with their money. The United
States of America has one of the greatest living levels or standards in the world. Despite the
fact that certain nations, such as Switzerland and Germany, have higher average incomes than
the US, their living standards are not greater due to the high cost of living. As a result, the
same amount of money buys less in such countries. Life expectancy, educational standards,
health, cleanliness, and leisure time influence the overall degree of human pleasure. As a
result, it is clear that companies and non-profit organizations play critical roles in boosting or
deciding the living standards of all people.
Businesses and non-profit organizations, on the other hand, can only increase the level
of life or living standards for everyone by working together. Risk, as previously said, relates
to the danger of losing time and money, as well as failing to accomplish an organization's
goals. For instance, suppose there aren't enough blood donors, the American Red Cross may
be unable to supply the demand for blood from catastrophe victims. Microsoft, for example,
is on the verge of missing its revenue and profit goals if people die due to a lack of blood
donors. These two organizations may work together to enhance living standards for everyone.
For example, because Microsoft can easily reach many people through their platforms, they
can urge many individuals to give blood, which will help the Red Cross raise living standards
for all.
Furthermore, when firms and employees gain more wealth, they are more likely to
spend, increasing demand for more products and services and accelerating economic
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expansion. The economic activity created by businesses raises everyone's level or standards
of living. Moreover, management provides enough goods and services to clients, assures
customer contentment, arranges new job prospects, and produces a pleasant working
environment. These policies promote a higher quality of life for employees by enhancing
productivity and revenue.
In the last twenty years, the number of non-profit organizations, as well as the number
of workers and volunteers that work for them, has increased considerably. The government is
the country's largest and most prevalent non-profit institution. These non-profits, like their
for-profit counterparts, have goals and need money to accomplish them. On the other side,
their goals aren't profit-driven. The objective of a non-profit organization might be to feed the
needy, protect the environment, boost ballet attendance, or reduce drunk driving, for
example. As a result, non-profit organizations may improve everyone's level of living.
Non-profit organizations do not compete in the same way that for-profit companies
do, but they compete for quality workers, restricted volunteer activities, and campaign
contributions. The borders that traditionally separated non-profit and for-profit organizations
have loosened, allowing for increased cross-pollination of ideas. As discussed in the ethics
chapter, for-profit firms are now tackling social concerns. Non-profits that are successful
apply commercial concepts to increase their efficiency. Not-for-profit CEOs are worried
about the same challenges as their for-profit counterparts, and by working together,
corporations and non-profits can increase the standard of life for everyone.
Senior managers at a museum, for example, oversee the museum's administrative and
business operations, such as human resources, finance, and legal matters, in addition to
pursuing the museum's artistic objectives. Because ticket sales only pay a small percentage of
the museum's operational expenditures, the director spends a lot of time asking for substantial
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gifts and memberships. Art fans and business leaders who wish to see competent financial
decision-making in a non-profit context make up the boards of directors of today's museums.
As a result, the aesthetic aim of a museum must be balanced with the institution's financial
practices.
Finally, businesses and non-profit organizations are important to the community
because they serve as vehicles for bringing social concerns to the public's notice. They are
particularly designed to assist communities in overcoming certain difficulties, therefore
raising awareness and providing motivation for change. As a result, businesses and non-profit
organizations can improve the standards of living for everyone.
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Works Cited
Cowan, David. Frank K. Knight. Palgrave Macmillan, 2016.
Mustafa, Isedu et al. "Does Financial Risks Has Effects On The Performance Of Deposit
Money Banks In Nigeria?". Saudi Journal Of Business And Management Studies, vol 6,
no. 3, 2021, pp. 71-85. SASPR Edu International Pvt. Ltd,
https://doi.org/10.36348/sjbms.2021.v06i03.004. Accessed 10 Dec 2021.
Nageswarakurukkal, Kabil et al. "Improving Fundraising Efficiency In Small And Medium
Sized Non-Profit Organizations Using Online Solutions". Journal Of Nonprofit & Public
Sector Marketing, vol 32, no. 3, 2019, pp. 286-311. Informa UK Limited,
https://doi.org/10.1080/10495142.2019.1589627. Accessed 10 Dec 2021.

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