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Business Situations

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Analysis of business situations is a vital thing for any business organization so as to make tough decisions. It involves identification of a firm’s financial strengths and weaknesses by ascertaining the connection between items found on the profit and loss account and the balance sheet. This is important as one is fore-warned before taking up a risky venture that could jeopardize an organization’s success. It should however be noted that application of a right tool of analysis can not compensate for inexperienced managers. The tool would only become useful the moment it will be used to produce results efficiently and the results correctly applied. An inexperienced manager is not able to use the right analysis tool for this purpose and thus the right analysis tool won’t be useful (www.accountingformanagement.com, 2009).

Unavailability of good data on which to work on and inability to manipulate the data so as to get a good interpretation would deem the tool of analysis worthless. Therefore, an inexperienced manager will not produce the desirable results since he lacks the know-how on data analysis and interpretation of the results. Results obtained from the use of such a tool can be applied to a wide number of environments and is not limited to any one particular situation. For example, within a certain organization the various departments found can use those results. Incase of inaccurate data, the results obtained would be wrong and this will most definitely lead to wrong conclusions and actions based on those results. An inexperienced manager might not notice such an error and therefore won’t find the faults in the results (Wilson, 1993).

According to Tague (2005), whether there’s improvement in the technology used in the analysis process or not, analysis tools can never fully replace human experience. A manager’s knowledge is the one applied in writing up analytical reports and also make findings by use of these analytical tools. A hammer becomes useless in a workshop if there’s no one to put it to use. Computers do not think, do not learn from their mistakes and cannot manipulate their environments. It is the humans who feed data into them so that they produce solutions to complex problems. But correct interpretation of such results and putting the same to action is done by humans. Apart from thinking in the manner that they are programmed, computers do nothing more. People are the ones who influence how a computer operates.

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