Q. Problems of pursuing only profit objectives?
- Conflict with other stakeholder goals for example customers will want a better service and not want to pay anymore, a better service may involve training costs for staff which would have to be paid for out of profits.
- Encourages short-term thinking by managers as they are only interested in increasing short term profits at the detriment of long term profitability and survival.
- Other non-financial measures are ignored which would give a better rounded assessment of an organisation. Examples would be customer feedback, customer complaints, employee turnover, market growth, reasons for faulty items.
- Not relevant to non-profit making organisations as their main aims are other things such as maximising profitability.
- There is a huge temptation to massage figures if only measurement used to reward managers is on the grounds of profit generation.