- Profitability
Businesses tend to provide goods and services that would yield maximum profit.
- Level of competition
In order to survive in a competitive market, firms must come up with products with products that consumers prefer. A firm may therefore develop products that are not currently available or copy rivals ideals and improve on them.
- Cost of production
A firm would produce commodities for which production costs are low.
- Demand/ market
A firm will produce commodities that have the highest demand since demand leads to high sales volume.
- Availability of resources
A firm can only produce commodities for which the necessary resources are available. Such resources include raw materials, labor, equipment, adequate space and appropriate technology.
- Government policy
A firm should produce goods which are favored the government policy e.g. low taxation and subsidies. Firms should not produce goods that are illegal as it will be breaking the law.
