Maximization

Maximization is the act of picking an alternative that enhances a certain type of performance outcome. For example, a business could elect to maximize its sales or its speed of delivery to customers. The choice made does not necessarily reflect the most optimal situation, where the desired outcome is combined with a low cost structure. Consequently, maximization can result in poor overall financial performance for a business. For example, a management team could elect to rapidly expand sales in order to gain market share, even though some of the sales will not earn a profit. Or, the managers could push for a rapid speed of delivery for customers, even though doing so requires an inordinate investment in finished goods inventory.