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Making business decisions involves choosing between alternative courses of action.
Making business decisions involves choosing between alternative courses of action. Many factors affect business decisions, yet analysis typically focuses on finding the alternative that offers the highest return on investment or the greatest reduction in costs. Some decisions are based on little more than an intuitive understanding of the situation because available information is too limited to allow a more systematic analysis. In other cases, intangible factors such as convenience, prestige, and environmental considerations are more important than strictly quantitative factors. In all situations, managers can reach a sounder decision if they identify the consequences of alternative choices in financial terms. This unit explains several methods of analysis that can help managers make those business decisions.
- Describe Differential analysis to drop/keep customers
- Describe Differential analysis regarding product line offerings
- Describe Differential analysis regarding Make-or-Buy decisions
- Discuss the role qualitative information may have in differential analysis
- Discuss sunk and opportunity costs, why must managers consider these things?
Provide a brief explanation of why a managerial decision may be made, at times, that doesn't align with the quantitative recommendations of the analysis.