Business decision making and command words common mistakes

Common mistakes

• Confusing fixed and variable costs

  Assuming all costs that increase with output are fixed.

  Fix itFixed costs remain constant regardless of output, while variable costs change with the level of production.

• Confusing fixed and variable costs

  Assuming all costs are fixed and do not change with production level.

  Fix itFixed costs remain constant regardless of output, while variable costs change in proportion to the quantity produced.

• Assuming revenue growth equals profit growth

  Thinking that higher revenue automatically means higher profit.

  Fix itRemember that profit depends on costs; a rise in revenue can be offset by higher costs, leading to unchanged or lower profit.

• Treating all stakeholders as equally important

  Assuming that all stakeholders have the same level of influence and interest.

  Fix itRecognise that stakeholders differ in influence, interest, and power, and prioritise accordingly.

• Confusing "justify" with "explain"

  Providing a simple description of why something happens instead of giving a reasoned opinion.

  Fix itWhen you see "justify", add a clear argument or evidence that supports your stance, not just a factual explanation.