Decision on what goods and services to produce

Business studies study module

A firm makes a number of important production decisions. Some of the decision may involve;

  • What to produce
  • How production is to take place e.g. what raw materials and machinery should be utilized
  • Where a production plant should be located
  • When to produce
  • The scale of production e.g. how big should the factory
  • When and where to invest
  • How the production can be improved and controlled
  • What type of business activity to engage in

NOTE: One production decision may lead to a series of decisions requiring to be made e.g.

-for a firm to decide on what goods and services to produce, market research to evaluate the likely success of the product is necessary.

-after establishing the viability of the product in the market, other activities like product design are carried out (the firm may consider redesigning existing products, introducing a product similar to the one in the market or developing a completely new product.

-production may then follow



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