1.5.5 Business Choices

• Opportunity Cost


  The value of the next best alternative is forgone when making a decision. Consumers, firms and governments all face opportunity costs.
• Trade-off


  When two objectives cannot be fully achieved one must be prioritised
• Product Trade-off


  Upgrading an existing product or investing in r&d for a new product
• Customer Sales Trade-off


  Loss of a prestigious customer or lucrative order or loss of overall sales revenue
• Market Research


  Foregoing market research can get a product to the market quicker, but it may not have the desired qualities
• Business Ownership


  Operating as a partnership means losing the benefits of operating as a private limited company but it is expensive to become an Ltd
• Promotional Methods


  Firms have a limited amount to spend so sponsoring an athlete means giving up other forms of promotion eg. billboards
• Pricing Strategy


  Competitive pricing means they cannot price skim