The search for alternative courses of action, Managerial Accounting

The Search for Alternative Courses of Action

The second stage of the decision-making model is a search for a range of possible courses of action (or strategies) that might enable the objectives to be achieved. When the management of a company concentrates completely on its present product range and markets, and market shares and cash flows are permitted to decline, there is a danger which the company will be unable to generate adequate cash flows to survive in future. To maximize future cash flows, it is necessary that management identifies potential opportunities and threats in its current environment and takes any developments which may occur in the future. In particular, the company must consider one or more of the below courses of action:

1. Developing latest products for sale in existing markets;
2. Developing latest products for new markets;
3. Developing latest markets for accessible products.

The search for alternative courses of action includes the acquisition of information regarding future opportunities and environments. It is the most hard and significant stage of the decision-making procedure. Ideally, firms should consider all alternative courses of action, but, firms will in practice consider only a few alternatives, with the search procedure being localized originally. If this kind of routine search activity fails to generate satisfactory answers, the search will become more widespread.

Posted Date: 12/4/2012 6:20:50 AM | Location : United States







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