Question

what are the shortcomings in the profit maximization objective as a managerial strategy?

Answer 1

Shortcomings of profit maximization objective as a managerial strategy are as follows:-

1) Short term goal :- Profit maximization leads to meet short term goal of making profit rather than long term goals, which could benefit the stakeholders.

2) Employee training :- In order to maximize profit no training is provided to employees and no research work is done.

3) Low product quality :- Use of low quality material , avoiding cost of reaserch and development, reduces the quality of the product and hence aims to maximize profit.

4) long term goals :- Due to the goal of Profit maximization, the managers are not able to focus on the long term goal, as there is no research and development done to improve the company.