A management decision may be beneficial for a given profit center, but not for the entire company. From the overall company viewpoint, this decision would lead to

A management decision may be beneficial for a given profit center, but not for the entire company. From the overall company viewpoint, this decision would lead to:

Sub-optimization.

Explanation:

Suboptimization describes a situation whereby changes effected in a unit of an organization improves the specific component without benefiting the whole organization.  It is a common policy mistake that management makes when it uses its success in a department or division to apply the same techniques in a different division without achieving similar results.  This implies that management may focus on one component of its organization and make improvements in that one component while the effects on the other components are ignored.  Simply, it means optimizing the results of a unit rather than the results of the whole organization.

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