Question

With alternative choice decisions, managers seek to choose the alternative most likely to accomplish the objectives of the organization. In addition to ROI, discuss other business objectives that may be important in the choice of the best alternative.

Answer 1

Objectives of a business must be satisfied while going for alternative choice. Important business objectives in this regard are as below:

No.1) Long-term sustainability: Today’s return on investment (ROI) must be maintained in future as well. It means if there is various choices, the project having ROI for highest number of years should be considered.

No.2) Best use of resources: making higher ROI should not be the only criteria; a business must have objective of using resources (land, labor, material, and capital) in the best possible way. If resources are wastage but ROI is high, the business should not select that choice.

No.3) Competitive advantage: a business must have this objective because of staying safe in market competition. Although the ROI is high for a choice but there is chance of loosing competitive advantage in future (like the chance of more number of firms in the market), in that case such choice should not be taken.

No.4) Minimum capital requirement: financing is always a problem. A business must select an alternative which requires minimum capital. High ROI may lead to high capital requirement; the business has to analysis whether such fund could be acquired or not; if not then there is other choices.