I need an assist on a reply to my classmate questio n Here is the topic: In this

Question

I need an assist on a reply to my classmate question

Here is the topic:In this week's readings, we looked at the concept of distribution of wealth. In reviewing these concepts, how "fair" is it to expect the owner of a company who puts up a tremendous amount of risk in creating a company, to share more and more of the wealth that the company makes with others? Make sure you support your answers. Students should plan on having initial postings completed by Thursday evenings, and submit responses to at least two other student postings by Sunday evening.

Here is my response:

On the grounds of fairness the owner of the company is not only putting a great deal of toil, sacrificing the opportunity to earn something else, there is a great deal of risk, the risk of not earning enough to run the business, the risk of not performing well in the market, and the risk of getting insolvent. However we must consider the fact that the owner of the company is distributing the overall income earned by the company among its factor of production and keeping a significant share of the income as profit.

Owners while on one side bear the risk of insolvency also enjoy a great deal of profit when the company performs well. The factors of production are usually not involved in this distribution of profit and therefore the profit belongs to the owner only. If we keep this fact in our consideration for fairness, we can believe that owner of the firm is fairly paid for the risk taken by him and for the profit earned by him as a result.

Here is their response:By operating under this philosophy, are we also forced to work on the premise that the owner of a company does not ultimately need the assistance of others to truly make the company successful?

Explanation / Answer

The questions might have come because of the s use of the following:

"The factors of production are usually not involved in this distribution of profit and therefore the profit belongs to the owner only. If we keep this fact in our consideration for fairness, we can believe that owner of the firm is fairly paid for the risk taken by him and for the profit earned by him as a result."

The above paragraph conveys a meaning that, for a company to be profitable , the entire credit goes to the owner.

Your rest of the answer seems fine and idea is correct expect for this paragraph. Since owner has taken the risk of creating company, has invested lots of money, major earnings are taken by the owners, which is very justifiable. For a company to be profitable, owner alone isn't sufficient. A company is successful because of the combined efforts of the owner and employees of the company and others whoever have contributed to it. Therefore, sharing a part of profits with them is completely justifiable. Also, profit sharing has other benefits such as, it improves the brand image of the company, employees become motivated and work even harder, can attract new investments, etc.

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