Main Factors Beyond Decision Making

Question Discuss about the Main Factors Beyond Decision Making. Answer: Introduction: The profit seeking companies completely focus on making profit intensively. However, profit maximization cannot be considered as performance criteria. The idea of improving profit is not just worthless, but hazardous (Dimitrijevic, 2015). The main responsibility of a company is not the enhancement of revenue, but the attainment of enough income to permit for the dangers of the monetary action of the business. Profit is similar to oxygen for the company. Without this profit, a business cannot make progress. However profit maximization, like too much oxygen, can make issues as in this situation a company completely concentrates on income improvement and ignores other aspects. The managerial decision making process becomes poor and due to which protection, services and performance of products declines. The process of income maximizing increases organizational poisonous that damages whole industrial sector. The companies must concentrate on contentment and satisfaction of customers. They have to focus on wealth maximization, improving sales, and attaining additional shares in markets. In this era of globalization, various contemporary corporations are concentrating on value creation (Ibrahim, 2009). In wealth maximization, the managers concentrate on cash flows, value of business and prosperity instead of profitability. To become prosperous in this era of internationalization, the companies have to remember that profit is imperative but profit maximization is perilous for heath of companies and societies. Short term and long term decision making processes differentiate due to different time periods. They possess diverse objectives in the company and both are imperative to expand incomes for the company (Al-Tarawneh, 2012). Short term decisions are made for accomplishing shorter period objectives as these are planned, premeditated and operational in nature. These decisions can be modified easily as per requirements and they require limited time period. On the other hand, long term decisions influence strategic targets and require huge amounts of financial value. These decisions have a huge monetary affect on the company in case of inappropriateness. These decisions are divergent in nature so require dissimilar type of facts. Management accounting system provides relevant information for making these decisions. Long-standing decision making process impact whole business so enduring estimations of companys income and market situations will assist to decide. Tactical or operational decisi ons impact customers and profitability. The manager require information about customers demands, number of customers, sales, stocks, and market trends for short term decision making process. In making longer term decisions, the managers required comprehensive data about future and current market positions. The information about political, social, ecological, operations and technological factors is also required. It requires several months or weeks, practicability researches and costs of information. In short term decision making, the managers are required to get data about sales, worker prices and expenditures. The data is arranged in heads of costs and sales and it provides a clear picture of tendencies and customer preferences. Market research is essential for making short term decisions, yet managers focus on their institutions as well (Nooraie, 2008). In 2014, Tesco changed the commercial incomes and made it judgmental. The company manipulated financial statements for covering some losses. Monetary reports demonstrate the financial health of corporations. Before making relationships with companies, the financers, lenders and probable core consumers evaluate these statements comprehensively. Value creation of personnel depends on amount of revenues a corporation generates. Manipulation of financial reports is natural process as in this situation entities have an excellent inducement. Unhappily, the corporations misrepresent debts, inventories, ratios, charges, depreciations, estimations of prosperity and incomes, loans, and materials to present them healthier. Impracticable forecasts can be presented excellently without really achieving. Reserves of bad debts are diminished through reducing expenditures of bad debts. The company inflates the good and hides the fact of insolvency (Koch, 2010). Current assets are manipulated to incre ase reserves. Earnings are boosted artificially by decreasing the expenses of depreciations. It becomes difficult to understand that whether a corporation is really reinvesting or is just entertaining the advantages. Companies will positively forecast the enlargement of investments in the pension plan, so diminishing the expenditures. Costs of outmoded inventories are lessened to demonstrate high inventory. Amounts of earnings are also changed as per requirements. The corporations do these fabrications to mislead financers and investors. Sometimes, corporations can struggle to conceal an unproductive period by selling low demanded inventories in the markets. They can change big quarterly loss but earn insignificant profit. Companies also hide their weaknesses and deficiencies through modifying standards and promote financers to go through statements without hesitation. They can appeal high investments (Northrop, 2013). The financers, shareholders and investors invest without doubts. Goodwill of companies also boost significantly as well. References Al-Tarawneh, D.H.A., 2012. 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