Decision-Making And Forward Planning


Decision-Making And Forward Planning

The chief function of a management executive in a business firm is decision-making and forward planning. Decision-making refers to the process of selecting one action from two or more alternative courses of action. Forward planning on the other hand is arranging plans for the future. In the functioning of a firm the question of choice arises because the available resources such as capital, land, labour and management, are limited and can be employed in alternative uses. The decision-making function thus involves making choices or decisions that will provide the most efficient means of attaining an organisational objectives, for example profit maximization. Once a decision is made about the particular goal to be achieved, plans for the future regarding production, pricing, capital, raw materials and labour are prepared. Forward planning thus goes hand in hand with decision-making. The conditions in which firms work and take decisions, is characterised with uncertainty. And this uncertainty not only makes the function of decision-making and forward planning complicated but also adds a different dimension to it. If the knowledge of the future were perfect, plans could be formulated without error and hence without any need for subsequent revision. In the real world, however, the business manager rarely has complete information about the future sales, costs, profits, capital conditions. etc. Hence, decisions are made and plans are formulated on the basis of past data, current information and the estimates about future that are predicted as accurately as possible. While the plans are implemented over time, more facts come into the knowledge of the businessman. In accordance with these facts the plans may have to be revised, and a different course of action needs to be adopted. Managers are thus engaged n a continuous process of decision-making through an uncertain future and the overall problem that they deal with is adjusting to uncertainty.

To execute the function of ‘decision-making in an uncertain frame-work’, economic theory can be applied with considerable advantage. Economic theory deals with a number of concepts and principles relating to profit, demand, cost, pricing, production, competition, business cycles and national income, which are aided by allied disciplines like accounting. Statistics and Mathematics also can be used to solve or at least throw some light upon the problems of business management. The way economic analysis can be used towards solving business problems constitutes the subject matter of Managerial Economics.


Like it? Share with your friends!

BMS Team

We, at, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to [email protected]


Facebook comments:

Choose A Format
Personality quiz
Series of questions that intends to reveal something about the personality
Trivia quiz
Series of questions with right and wrong answers that intends to check knowledge
Voting to make decisions or determine opinions
Formatted Text with Embeds and Visuals
The Classic Internet Listicles
The Classic Internet Countdowns
Open List
Submit your own item and vote up for the best submission
Ranked List
Upvote or downvote to decide the best list item
Upload your own images to make custom memes
Youtube, Vimeo or Vine Embeds
Soundcloud or Mixcloud Embeds
Photo or GIF
GIF format