Managers face constant decision making. Their decisions are most often the choosing between various courses of action. This principle reminds them of the necessity of measuring the cost of undertaking each action against the benefit.

Often in business we start an activity because it seems a "good" thing to do. The activity seems to be "needed" or "desirable". Hardworking loyal employees often suggest-these new activities — or Just start them. It is the manager to evaluate the real need for the new activity in terms of real benefits to the business

Further, the manager must also consider alternative courses of action to obtain the benefit desired. There are many, many opportunities for a business to expand, to grow, to take on new activities. But every business has some limitation in resources, in manpower, in money. It is the manager's job to analyze and select the activities that obtain the maximum business benefits at minimum cost.