Question

Question: According to Goldratt, the goal of the firm is to do what?

Short answer

Answer

The goal of a firm is to make money

Step-by-step solution

Introduction

Goldratt states that the company's goal is to increase throughput by producing revenues while decreasing operating expenses and inventory. The amount produced by the firm is referred to as throughput. The company sells inventory, and operational expense is the amount used to sell inventory to generate throughput.

Analyze

According to Goldratt, an organization may have various goals, such as creating jobs, using materials, raising revenues, gaining market share, advancing innovation, and manufacturing high-quality goods. They do not ensure the firm's long-term existence.

The purpose is to publish a management book by Goldratt that focuses on corporate operations management. It includes a theory of constraints, bottlenecks, and cases involve. The firm's goal, according to Goldratt, is to raise throughput by generating sales while lowering operational expenditures and inventories. The quantity generated by the company is referred to as throughput. The firm sells inventory, and operating expenditure is the amount utilized to sell inventory to create throughput.

The company should locate the bottleneck, present resources, move current resources to the bottleneck, increase resources accordingly, and locate bottleneck improvement limitations. The objective is to grow sales while decreasing costs to raise productivity further. And to optimize the process, ensure that the bottleneck equals the market demand.