Factors that enhance making decisions in a business

For a good business to thrive, it must have a solid basis. Various procedures are taken to ensure that the business grows rapidly. When these aspects are considered, they enable the creation of efficient judgments that will propel the business to new heights (Hodzic and Gregovic, 2016). These elements are as follows:

While making decisions, choices must be made. The decisions are critical to the viability and sustainability of the given firm. The actions made may worsen business deficits or benefits. Decisions are undertaken with an open mind. The goal which has been set up before the commencement of the business is followed keenly.

The effect of the label

The label presented to the general public is done in such a protective way so that the impact can be propagated top many people. This is achieved through the aid of good resolutions that the owner wants to employ. The decisions should favor both the customers and the label itself. Rules are set whereby both the customer and the business owner have to conform to them. It is better for the business owner losing all profits achieved but keep the name of the label intact. An established business should be available such that when one wants to change or review his products, the customers are aware and are not confused by the situation (Hodzic and Gregovic, 2016).

Outcome of profit

Business is geared towards accruing profit. Hence, management of the business is done with a good deal of strictness. Measures are imposed such that the profit is not affected when the business is down. However little the profit is, it is plowed back into the business for it to prompt more income. If the profit is higher, it is channeled back into the business without considering how it will be used. Some business owners prefer to shut down their business when there is no profit. This should not be the case as constant doing of business will enable gain in profit with time (El kalak and Yamada, 2016).

Outcome of resources

The effect of profit on resources is given immense consideration such that one can investigate the impact it has on the resources. The decisions made should have a positive impact on the production. The resources suggested should be enough to sustain the accounts of the business and generally leading to a higher production. Decisions regarding operations in the business are treated with utmost concern. High expertise is needed in conducting business activities. This includes having highly skilled workers who are aware of each and everything taking place in each section in the company. This will be easier when handling customers in setups which contain many samples in one type of business (El kalak and Yamada, 2016).

When making decisions in a business, it vital to consider how the system would be. The decisions should only be effected after consultations with stakeholders. These include managers the in the business and customers. Alternatives are necessary to consider before a decision is reached. The options available are integrated into the business in a bid to foster sustainability.

Importance of the process of making of a decision

It aids in good decision making as operations in a business is carried out in an efficient manner. Operations in a company depend on the decisions made. Wise decisions enhance operations in the company to go swiftly. This is with effect from the managerial position, departmental activities, and customer affairs.

It ensures there is a thorough research in all stakeholders involved in the business. The parties involved are probed and then selected in a close and categorical manner so that the performance index can be determined. People with relevant qualifications are the ones allowed to get involved in the company affairs.

It improves the level of confidence among workers as the prior decisions favor them. They should be deeply informed on the mechanics and dynamics of the business. Since workers qualifications are looked into and their working environment is analyzed critically, the staff members are confident while going about their day to day activities (El kalak and Yamada, 2016).

Importance of financial factors in the making of decisions in a business

Value of the economy is added

Decisions which are made in time enhance the good economic growth of the business. The business owners should examine the setup decisions before interacting with the business. It enables the value of the business to increase the value of the resource is increased. Goals should be enacted by the business which they are able to follow.

Management of the assets

Assets such as inventories are managed well. This is so that the business’ viability and sustainability are determined and hence the business longevity can be mapped out. The available coffers are employed in the most judicious and wise way so that they enterprise can remain relevant and versatile. Each docket which has been allocated a given amount of money should be accountable for it. Any assets being received in the business should be determined so that the balance sheet is checked (El kalak and Yamada, 2016).

Free flow of cash

It determines the efficiency and adequacy of the business enterprise. It is what is available after all deductions on the investments are made. From this, a company is declared if it is fit to undertake its usual activities. Free flow of cash is what determines the growth of a company and it should use this opportunity very well.

Financing of the structural capital and decisions

This fact depends on the structure of the capital. It is the level which determines the progress and performance of the business. Insufficient funds for the business results in financial constraints and restraints that derail or slow the rate of business growth. Capital ranges from finances to the machines that help in the performance of the business. It is also what is needed for the payment of its staff members. When the capital is high, some companies allow others to borrow from them. This enables an enormous growth in the business.

Ratios in profits

It is important to note an inefficient portion in a company hence enabling correction of the low areas in the firm which improves the production rate. The total worth of the company and the profits accrued on the sales are considered. When there is an increase in capital, there will be little investments done since much input has been put in the business.

Relative growth in terms of the indices

They play a vital role in the business world as they are the determinants of a good market. Profits which have been gained in the business are differentiated easily while returns which have been made on investments are factored in. This helps the company setting up indexes which enable good growth.

Risk management and assessment

A risk is a step a company undertakes but it is uncertain if it will put a positive impact on the business or fail the business. For every business, it is logical for these uncertainties to be cleared. This can be done by controlling the risks involved in the governance and setting up measures to counter the occurrence of these uncertainties.

Optimization of tax

Many businesses have to manage their tax levels in order for the business to thrive. Where there are risks, mitigation measures should be embraced so that the taxes are reduced. Where there are developments in projects, the net tax is factored in.

Characteristics of business risks characteristics that impact on business and financial decisions

Business risk management involves managing factors which threaten business existence. These risks occur unexpectedly and future situations like those have to be countered. This includes risks related to the environment and the nuclear at large. Appropriate expertise must be used to counter these risks. All the stakeholders involved in the business should be able to control the business generally. Consultants can showcase their skills in managing risk situations in a particular firm. On the other hand, auditors follow the procedural rules in the firm.

The process of Risk Management

This process involves several stages starting from transmission of data, its assessment towards the revenue gained from the process. The data being transmitted on the business is analyzed carefully and then transmitted to other stages. This is after incorporating qualified personnel into the business. From this stage, there is the option of weighing threats against opportunities when hiring staff members. The type of business to be conducted must be determined. The owners of the business seeking for investors for the company so that they can magnify their financial base. The investors should have the goodwill to aid the company to grow. The business owner then builds a rapport with his partners so that there can be a smooth flow of ideas and cash. Technical hitches are settled through coordinated consultation through the business hierarchy.

The next stage is for the outputs incurred in the business to be developed. Quality measures are employed to facilitate the development process. In cases which need higher measures, considerations should be advocated for such that options are provided to arrest exorbitant expenditures. Once a risk has been developed, a plan is hatched for actions to be taken. The plans are arrayed in a consequential manner for their implementations to be applied. Problems and errors are minimized. Revenues collected are given a detailed accountability in order to avoid misappropriation of funds.

The process of risk management is characterized by conducting a shrewd process in business. Activities undertaken are appraised to boost the business performance. Relevant authorities involved in the company are trained in managing the operations. Projects related to the company are underpinned to bring in some profit so that the risks associated with them are averted. The top authorities in the company should be able to evaluate whether there are mistakes in the relevant departments. The management should set up rules on the investments such that appropriate guidelines are followed on how they will be used. A good procedure is required to evaluate the input process. The procedure should be free and fair.

The management is responsible for anything that transpires to the company. Hence, the management should be able to have a good vision that can steer the company clear off financial doldrums to a good success. Available opportunities are seized and utilized since they expand the business performance. Resources distributed in the business is monitored to ensure that no wastage of pilferage occurs.

Process of identifying a risk

It is the chain of activities that help in determining and arresting risks in a business setup. It is derived from the technical hitches and challenges that are witnessed in the monitoring process. In the business set up, there include operating risks and marketing risks. The operating risks contain operating, project, transaction and system risks. The marketing risks involve demand, correlation, liquidity, and rate of interest, the price of the asset, the rate of exchange and the risk of bearable. Consequences which affect the business directly or indirectly are counteracted. Long-term solutions are created in the process (Kashi and Franek, 2014).

Process of assessing the risk

It is vital for the risk to be assessed so that the provided information can guide the management how it should be analyzed. Necessary parameters are used to guide the business to know how much loss they are obtaining (Kashi and Franek, 2014).

Process of managing the risk

In this stage, necessary measures are required to eliminate the risks which are present in the business. This involves reducing, avoiding, transferring or maintaining the risks. Programs which enhance safety are advocated for. This can be in terms of healthcare, or security. Incidences which involve losses should be done away with. When eliminating the risks the problems in the company are also eliminated hence the creation of chances of profits (Kashi and Franek, 2014).

Process of maintaining the risk

This process is done unprocedurally in a willing manner and the companies involved clarifying what type of risk they want and which one should be phased out. It is different for particular companies as one company may phase out a problem and the other might be in need of it.

The risk management process is important as it needs an open place. The company changes at some time and it is important as the surrounding environment is affected. Sometimes mistakes arise in the company. The management is able to point out the mistakes and change them (Kashi and Franek, 2014).

Process of controlling the risk

It is the final stage in the management process of the risk. It requires clarification on changes on the results obtained in the management process. An audit is conducted through a thorough, calculated analysis. The process of financial planning is then done. The present financial condition is determined before appropriate goals are determined. Actions are then applied then they are evaluated. Finally, a financial plan is created before it is reviewed.

References

El kalak, I. and Yamada, K. (2016). The Declining Power of Business Groups and Firmss Financial Decision-Making. SSRN Electronic Journal.

Hodzic, N. and Gregovic, N. (2016). Significance of financial audit reports for decision making of external corporate users. Ekonomski izazovi, 5(9), pp.114-125.

Kashi, K. and Franek, J. (2014). Applying Group Decision Making and Multiple Attribute Decision Making Methods in Business Processes. Applied Mechanics and Materials, 693, pp.237-242.