ACCA Applied Knowledge · Business and Technology · The purpose and types of business organisation
Zeta Ltd's directors choose to accept a satisfactory level of profit rather than pursue the maximum possible, because they wish to avoid the effort and risk involved. Which concept does this behaviour illustrate?
This illustrates satisficing: managers accept a satisfactory level of profit instead of pursuing the maximum, because they prefer to avoid additional effort and risk. It is the opposite of profit maximisation and is not stakeholder mapping.
- ASatisficingCorrect
- BProfit maximisation
- CStakeholder mapping
Explanation
Satisficing means settling for a satisfactory outcome rather than the optimal one, often because managers have their own aims such as limiting risk or effort. Profit maximisation is the opposite of this behaviour. Stakeholder mapping is a tool for analysing stakeholder power and interest and is unrelated.
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