by seema
(Pakistan)
How should we do HR decision making involving no financial costs but high reputational/ behavioral implications?
by Ces
(Tabaco City, Philippines)
What are garbage can and process models of decision making and their details?
Comments for Organizational Decision Making Models
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by Nozithelo
(Bulawayo, Zimbabwe)
Is profit more important than cash?
Answer
What the question is really about is working capital requirements. Almost every business requires a certain level of cash to keep operating. If that cash is used up then the business can go broke. Let's look at a simple example:
Suppose that you have a business that makes pizzas. You know that the ingredients cost $2.00 and the labor costs $1.50. You also know that you can sell the pizzas for $8.00. That gives you a profit of $4.50 per pizza. You are making a profit. The problem is, especially with a start up business, you need to establish a presence in the market place before you can make that $4.50 profit per pizza. You may have to have your business running for several weeks or months before you have enough customers to make a consistent profit. That means that you have to have a certain amount of working capital to get your business started. Enough to get you over the start up phase.
Even after the business is established there is still a requirement for working capital or cash. For example, you might know that you can make a lot of money when the local college is in session. Actually enough in 9 months to make you profitable for the whole year. The problem is that you need to keep your store open for the whole year. That means that for 3 months you must operate your business at a loss, which requires cash working capital.
So the answer is that working capital or cash can be more important than profit, if it is necessary to keep a profitable business running. However, no sufficient working capital requirement to make an unprofitable business succeed.
by JB
(Costa Rica)
If I as a BA have to take a decision regarding if a field in a system should has a particular behavior, e.g. a date field to display a calendar for easily enter of a particular date, what should I decide if I know that adding the calendar to that field will cost many hours of working for the developers. Should I ask for the calendar to be added instead of the extra work or should I let the field just as a date box?
Answer
Making an IT decision should be based on your goals and the financial facts. Is your goal to have a date input that will impress your customer? or Is your goal to have a date input box that is available, but won't be used much? If your goal is the former, then you have put a value on the impression that you want to leave. Is that value greater than the cost of the programmer to create it? If so then full speed ahead. That is a simple approach to ROI.