- 5 Marks
Question
One of the key stages of decision making in organizations is the collection of data on alternative courses of action.
Required:
State and explain THREE external and TWO internal sources from where data can be collected by a company seeking to add a new product to its production line.
(5 marks)
Answer
Internal Sources:
- Accounting Records:
- Explanation: Information on existing costs and their behavior can be obtained from accounting records. This helps in understanding the cost structure and profitability of current operations, which is crucial when considering the addition of a new product.
- Production Schedules:
- Explanation: These provide details on the products that are currently being produced, including their technical specifications and production capacity. This information is essential for determining if the company can accommodate the new product within its existing production capabilities.
External Sources:
- Government Policy on Labor:
- Explanation: Information such as the current minimum wage and permissible maximum working hours can be obtained from government publications. This data is vital for determining labor costs and compliance requirements for the new product.
- Industry Information from Trade Bulletins:
- Explanation: Trade bulletins can provide valuable insights into market trends, competitor activities, and industry benchmarks. This information helps in assessing market opportunities and threats related to the new product.
- Market Prices of Similar Products:
- Explanation: Data on the prices of similar products or substitutes can be collected from business journals or direct market surveys. This helps in setting competitive pricing for the new product.
(5 marks)
- Topic: Decision making techniques
- Series: MAY 2017
- Uploader: Dotse