Opportunity cost and business decision making

• Opportunity cost is the cost of your decision, the cost of missing out on the next best alternative, which is the benefits foregone.
• Opportunity cost is relevant to business decision making because resources are limited and choices have to be made about how to spend or invest those resources.
• Opportunity cost is not a fixed cost or a variable cost, it's a different concept altogether.
• Opportunity cost is relevant to business decision making because entrepreneurs, business management, directors, and boards need to weigh up the potential implications of decisions in terms of the benefits that they decide to forego by the choices that they make.