Live revision! Join us for our free exam revision livestreams Watch now


Profit Satisficing

Satisficing involves the owners setting minimum acceptable levels of achievement in terms of revenue and profit.

Satisficing is a term coined by economist Herbert Simon to describe a decision-making process in which an individual or organization settles for a satisfactory solution rather than striving for the optimal solution. Satisficing is based on the idea that individuals and organizations have limited time, resources, and information, and that it is not always possible or practical to pursue the best possible solution to a problem.

Satisficing can be contrasted with maximizing, which is the process of striving to achieve the best possible outcome. While maximizing can be a useful approach in some situations, it can also be time-consuming and resource-intensive, and it may not always be practical or achievable.

Profit satisficing is a business management approach that aims for a "good enough" level of profitability, rather than maximizing profits at all costs. The idea behind profit satisficing is that a company should prioritize other goals and objectives beyond profit maximization, such as customer satisfaction, employee well-being, or social responsibility. By focusing on these other factors, a company can achieve a balance between profitability and other important objectives, rather than simply chasing profits at the expense of other important values. Profit satisficing is often associated with the concept of "sustainable" or "responsible" business practices, which emphasize long-term thinking and a broader view of success beyond financial metrics.

© 2002-2024 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.