L2: Business Firms and

Decisions
TOPIC Midterms

SLIDES

CLASS MODE LECTURE

Completed

Date @February 9, 2022

What are business firms?

Business firms are balance of labor, financial, and physical resources that
aid in the decision-making of the management.

Business firms are economic entities that focuses on the production of

goods and services to consumers.

What are business decisions?

Business decisions are choices that dictates the course of the long-term
and short-term success of a business.

Steps for Decision Making

Define the Problem

Determine the Objectives

Discover the Alternatives

Forecast the consequences

Make a Choice

1. Define the Problem

L2: Business Firms and Decisions 1

 What is the Problem? - Identify the problems that causes the business to
struggle.
How does it influence managerial objectives? - How does the problem
identified affect the objectives of the business.

2. Determine the objectives

Goal of an organization or decision maker is very important. - It helps the
decision maker of the business to identify the possible solutions and
courses of action.

3. Discover the Alternatives

What are the factors under control - Identify the factors what do you have
under control to identify what to change in the management of the business.
Constraints - Identify the factors that the management cannot affect even
with the changes. It helps the business to manage the resources to be use
in solving practical business problems.
Know what are the possible options.

4. Forecast the consequences

Uncertainties - Avoid making decisions that the business cannot foresee
and cannot estimate.

Possible Outcomes - Identify the outcomes that the business can foresee
and can estimate with the possible options.

5. Make a choice

After identifying the problem, determining the objectives, discovering the

alternatives, and forecasting the consequences the business will then take
the best solution or course of action where it favors the business’ success.

L2: Business Firms and Decisions 2