While “maximizing shareholder wealth” is a common and important goal, especially for publicly traded companies, it’s not the only basic goal of a business. A more accurate and comprehensive answer is:

• The basic goal of a business is to create and sustain value.

Here’s why:

• Value Creation:
  • This encompasses generating value for various stakeholders, including:
    • Customers: Providing goods or services that meet their needs and wants.
    • Employees: Offering fair wages, safe working conditions, and opportunities for growth.
    • Suppliers: Maintaining mutually beneficial relationships.
    • The Community: Contributing to economic development and social well-being.
    • Shareholders: Increasing the company’s profitability and stock value.
• Sustainability:
  • Modern businesses increasingly recognize the importance of long-term sustainability, considering environmental and social impacts.
  • This involves responsible resource management, ethical business practices, and a commitment to corporate social responsibility.
• Profitability:
  • Profit is essential for a business to survive and thrive. However, it’s a means to an end, not the sole purpose.
  • Profit allows for reinvestment into the company, which then allows for growth, and greater value creation.
• Shareholder wealth:
  • For publicly traded companies, maximizing shareholder wealth is a primary goal. However, even these companies are increasingly aware of the need to balance shareholder interests with those of other stakeholders.

Therefore, while maximizing shareholder wealth is important, it’s more accurate to say that the basic goal of a business is to create and sustain value for all stakeholders.