Profit Strategy – Is a decision to do nothing new in worsening situation but instead to act as though the company’s problems are only temporary. The profit strategy is an attempt to artificially support profits when a company’s sales are declining by reducing investment and short term discretionary expenditures. Rather than announcing the company’s poor position to shareholders and the investment community at large, top management may be tempted to follow this very seductive strategy. Blaming the company’s problems on a hostile environment (such as anti-business government policies) management defers investments and / or buts expenses to stabilize profit during this period.
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