Strategic Management: Formulation and Implementation

Profit As An Objective

Ackoff argues that both profit and growth are means to other ends rather than objectives in themselves. He argues that profit is necessary for the survival of a business enterprise but is neither the reason for which the business is formed nor the reason why it stays in existence.

Therefore, Ackoff contends "those who manage organizations do so primarily to provide themselves with the quality of work life and standard of living they desire... their behaviour can be better understood by assuming this than by assuming that their objective is to maximize profit or growth."

However, in many respects it does no matter whether profit is seen as an objective or as a means of providing service and satisfaction to stakeholders, as long as both are considered and not seen as mutually exclusive. If profits are seen as a means to stakeholder satisfaction one could argue that service to stakeholders should be seen as the objective, and profit as the measure of success.