Determine the Objective:
Decision making is crucial for running a Business Enterprise. Decision-making refers to choosing from alternative courses of action or alternative ways of doing things.
The first step in the decision making process is to establish the Objective of the Business Enterprise. The most important Objective of a Private Business enterprise is to maximise profits. But the Objective of a Public Enterprise is basically not of maximisation of profits but to follow benefit-cost criterion. According to this criterion, a Public Enterprise should evaluate all social costs and benefits when making a decision. Example whether to build an Airport, a steel plant etc. When a Manager makes a decision, he chooses from some set of alternatives and acts on the one that he believes is the best and give good result. Setting right Objectives is critical for effective performance management. Objectives should specify priorities and focus. In simple words, decisions are made within the context of or set of Objectives set by the decision-maker. It is necessary to formulate a clear and concise statement of the Objectives of the firm.It is because if they are stated in a very general form they create ambiguity. Consequently, it becomes impossible to rule out whether a particular decision brings one closer to the stated goal. For example let us consider the following two ways in which a Manager might state one of its objectives.
Objective A: To increase the company’s share of the market.
Objective B: To increase its market share by at least 10% in the next accounting year.
With Objective 'A' the firm has hardly any way to evaluate the effectiveness of various decisions as they relate to this goal. A .The objective is satisfied with 1% increase or 50% increase. So it is not clear and effective whereas, with an objective stated as in 'B', from year to year the specific amount in 'B' might be revised. If the firm consistently achieves a given Objective, then the Objective might be changed to prevent unsatisfactory performance.
In short, if management decides that one of its Objectives is to expand its market share, Managerial economics can assist in determining size of the market, the likely reactions of competitors, and the techniques that will help in the achievement of this goal.
As a Manager of a firm, I would set Objectives that enables Me to accomplish my goals. It is a continuous process of research and decision-making. It involves Strategic Planning and Operational Planning. I will identify and set Objectives both for myself and my organization to ensure the right results.
Short term Plans:
Short-term objectives help businesses meet long-term objectives, making them an important element of any business decision.
My short term plans include assigning each objective to an employee or team of employees who will see the objective through to completion.
To regularly measure the progress of goals to ensure that they are met in time and adjust objectives if needed to meet the goals.
Hire new marketing employees over the next five months and increase social media posting to three times a week.
Long term Plans:
My long term plans include the following :
To Increase the total income of my Company by 10% over the next two years and reduce production expenses by 5% over the next three years.
To increase overall brand awareness and develop and launch three new products.
To increase Company's share in its market.
To open atleast three to four new Branches and hire expert staff to attain growth in Business.
It is true that 'One always can't get what one wants'. Business development is surrounded by Risk and Uncertainty factor. Uncertainty simply means the lack of certainty or sureness of an event. It refers to the inability to foretell consequences or outcomes because there is a lack of knowledge or bases on which to make any predictions. The only thing certain thing about uncertainty is that it can happen anytime, and when it does, no Company is exempt from feeling its effects.
Uncertainty can be dealt with Forecasting and updating plans regularly. So it is very important to analyse the financial position of the Company and its Market position. If a Product is getting negative feed back it should be improved immediately with proper planning and decision making.