What Is Economic Decision Making?
Economic decision making is the process of making business decisions involving money. The purpose of making these decisions is generally to come up with strategies that help to either make the company more valuable or to increase the owner’s revenue. Those involved in the decision-making process must have access to the company’s detailed financial reports and must have a good understanding of the company’s economic climate.
Success in the world of business depends on a company’s leaders ability to make wise economic decisions. Since economic decisions have to do with the amount of money a business earns or is valued at, it is essential that the decision-making process relies heavily on the company’s financial reports. The outcome of the decisions being made should involve some type of monetary reward, and the decision-makers generally expect the reward to be much greater than the cost or sacrifice that’s required to obtain it.
Oftentimes, making financial decisions that benefit an organization involves spending money. This money is often used for things like expanding marketing strategies, hiring personnel, increasing production or enhancing the quality of products. Economic decision making might also involve laying off employees, discontinuing certain products, selling a potion of the company or obtaining a loan from a financial institution.