Paper Example on Business Assumptions and How to Evaluate Them

Introduction

Before making any decisions, we have ideas we assume to be correct even though we may not have enough information to ascertain them (Nkwake & Morrow, 2016). Businesses also make assumptions before creating policies, while planning, and during decision-making (Mukherjee, 2017). Assumptions are necessary while strategizing, mostly because the business setting is unsure and insecure. There are five major areas where businesses make assumptions, and they are product and service assumptions, customer base assumptions, resource assumptions, profitability assumptions, and management skills assumptions.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

Businesses make assumptions on the financial viability of their products or services prior to making them or offering them in the market. According to Mukherjee (2017), business owners and managers have to assume, in an uncertain environment where research does not provide all the answers, that customers will be interested in their products or services.

Businesses also make assumptions about the needs of their customer base based on informed research. While releasing a product to the market, the managers assume that their product or service meets a real customer need (Chia, 2018). On resources, the business managers assume that the resources allocated to making a product or offering a service will be recouped after the sale of the product or service (Mukherjee, 2017).

Businesses also make assumptions about the profitability of a venture. With no certainty on the customer reception of their products or services, a business has to assume that a sizeable portion of the market has the needs fulfilled by their product or service, and that this portion will purchase their products or services in enough numbers to allow them to recoup their costs (Chia, 2018).

Finally, businesses make assumptions pertaining to their ability to manage the various divisions of a business. By evaluating their skills and competencies, business managers decide on whether or not they are qualified to manage marketing, business operations, product development, and other sectors of the business. Based on the assumptions, they may either decide to hire specialists, develop those skills themselves, or outsource them (Mukherjee, 2017).

Conclusion

In conclusion, business policymakers make assumptions about their companies, using the information available and their intuition to make decisions. While assumptions may make or break the business, managers can reduce the possibility of being wrong by acquiring information through research.

References

Chia, R. (2018). Foundations of management knowledge: Assumptions and limitations. Glasgow: University of Glasgow

Nkwake, A. M., & Morrow, N. (2016). Clarifying concepts and categories of assumptions for use in evaluation. Evaluation and Program Planning, 1(1), 1-20, DOI: 10.1016/j.evalprogplan.2016.05.014

Mukherjee, B. (2017). #5 Common assumptions made about businesses. Entrepreneur India. Retrieved from https://www.entrepreneur.com/article/304199 on 31 August 2018