A goal of operating activities is to create value for customers who purchase a company’s products. By creating value for customers, a company also can create value for its owners. To do this, a company must produce and sell its products efficiently and effectively. The opportunities, challenges, and uncertainties that arise from operating activities require managers to make operating decisions. Accounting information describes the results of operating activities. It can be used to identify and evaluate management decisions. Also, it can help decision makers form expectations about a company’s economic future and make decisions that will affect that future.
Company managers make strategic decisions that determine how a company will compete in its product markets. The managers, investors, creditors, and other stakeholders must then evaluate how successful the strategy has been.