Decision is very crucial in every business and the success of every business is attributed to effectiveness of the decision which is made. If the managers make sound decision ultimately the company will perform while bad decision making will only make things worse for the company or business. In that relation, it is important to note that sound decision is paramount in everyday life not only in business. A good decision calls for a calculated thought and that’s why there is success and failure. Failure is attributed to bad decision while success is attributed to sound decision making. In the same breath, it quite difficult to define business decision since every business is governed by specific ethical theories and at the same time there are some ethical considerations which should be taken into account when one is making and formulating a decision. In defining good decision making, good and sufficient information is paramount as well as experience in making the decision. Consultation goes hand in hand with information since one has to get sufficient information before making the decision. When making the decision, consultation involves seeking advice from different people especially the experts since their knowledge is pivotal to effective knowledge. Moreover, there are various aids which facilitate making information better and clear as analyzed. Numerical facts are at times very crucial when making a major business decision making since it reduces the cases of subjectivity and at times it enhances free thinking (Goleman et al, 2000, p.67).
Managers can be trained to better decision makers through following stipulated procedures which are in line with the training marks. Supportive environment is also crucial in attempt to make managers effective decision makers. It should be supportive in the sense that they should not be criticized when they make certain decision in as much as it is not very right. Proper support should be granted especially when the managers err and it paramount to ensure they get to know where they erred. Climate of ridicule and criticism creates unfair environment of reduced creativity and low chances of risk taking. Therefore managers will always avoid situation which need tough decision making as well as risk taking so that they can avoid being criticized. Such decisions will only diminish the chances of expanding the business and this means that growth will not be experienced. Also, adopting this kind of strategy means that the manager may spends a lot of time trying to pass the blame from one person to the other hence turning out to be a blame game business (Greco, 2012, p.35-43).
A skill in decision making escalates at all levels of business and the board of directors may be very crucial at some stages of decision making. For instance, decisions that involve the future of the company, may borrow a lot from the directors hence terming it as the ultimate stage of decision making. On the other hand, managers will only solve the tactical challenges which will emanate from their departments or areas which they are allowed to supervise. Moreover, employees and junior staff should make decisions concerning the conduct of the tasks which they operate. However, in such cases, careful selection and training is paramount in ensuring that the right thing is done (Goleman et al, 2000, p.57).
Types of business decisions
Programmed decisions .These are the standard decision which are always follow the same routine now and then. In the same breathe, they can be written down into various series which have fixed steps that can be followed by anyone. These decisions could even be written as computer programs. The idea of programmed decision was formulated by H.A Simon in his book” The new science of management decisions.” the programmed decisions were al defined as the repetitive decisions which were normally undertaken in the organization on a repeated procedure. Commonly, the related daily activities were relatively simple and relying on the data and solutions that were offered previously. The reordering of the standard inventories and preparing monthly newsletters which handle discipline and factors to determine the salary of a new employee are all inclusive (Goleman et al, 2000, p.38).
Second we have the non-programmed decisions which are normally non-routine and non standard. Each decision is not actually the same as any previous decision. This decision involves those which are made in response to novel and unique situations. The decisions usually develop extended geographical scope of the company, introducing a new product in the market or even entering a new service to the market. More also, cases of relocating headquarters to another country could also be an example of non-programmed decisions. The decisions require senior managers to evaluate the intricate problems and analyses the alternatives and finally make strategic decisions that have significant consequences to the organization (Goleman et al, 2000, p. 46).
Third, it is the strategic decision which affects the long term direction of the business. For instance, taking over company A or Company B involves strategic decision making. Strategic decisions are those which are concerned with long-term policies and the general direction of the business. The far and wide reaching decisions may affect the long-term as well as the short-term goals of the organization. Strategic decisions exhibit high risk factor since their outcomes are extensively unknown. It mainly involves steering the company into a completely different procedures and also acquiring the new procedures. Strategic decisions making is heavily employed in areas of finance, marketing, product technology and production changes and integration. Vesa Savollanen in his book” perspectives of information systems”, the strategic decision is unstructured, structured or c semi structured. The investment targets are usually unstructured strategic decisions and pricing decisions are some of the most semi-structured goals (Savolainen 1999, p.34).
Tactical decision is the fourth type of decision making and it involves medium term decisions that help in implementing strategy. For instance, the kind of marketing to have or the extra staff that needs to be recruited. Mostly the decisions here are predictable in terms of outcome. They are usually shorter in the scope than the strategic decisions. Tactical decisions are often needed when answering some strategic decisions. John V. Petersen in his book “Absolute beginner to the Database” affirms that strategic decisions usually focus on the main goals of the company. The fifth type of decision making is the operational decision making that normally involves short-term goals and decisions. Such decision involves the administrative decisions. For instance how to implement a particular task i.e. allocating duties to the supporting to staff. The criterion to use here is known as operational decision making (Petersen 2002, p. 45).
Levels of decision making
In as much as we have types of business decision making process, there are also levels which are involved in the decision making process. The levels are important since they indicate whether the steps involved are following the right format. First if employees feel that they want to make a particular decision concerning an issue, all that they do is communicating to the manager. The manager then evaluates the threshold of the issue and later forwards to the CEO who later tables it to the board. The board is formed by the owners of the company and they are very instrumental in the process of decision making. Many companies usually follow these principles when there making decisions in attempt to ensure that they are involving every party. Following the format ensures that every party is represented in the right way hence contributing to the growth of the business (Fitzgerald, 2002, p. 23-28).
Factors necessary for wise business decision
When managing the business, it is possible that one will be encountered with pertinent issues which may impact in the future of the company or any business. It may seem stressful but considering the following tips may help in improving the process of making a sound decision. First one should define as much as possible the decision that needs to be made. Is it your original idea or it is an idea from another person? More also, you ask yourself whether a decision is basically essential if not then you should make any decision at all. Also ponder why the decision is important or helpful to you in any way, how will the company or the business benefit. Brainstorming through writing as many as solutions as possible and come up with alternatives which could solve the problem. Checking out from friends and other people is also important since people will give different ideas some of which may be very clear and valid. Visualizing the outcome is also another issue that one should take into account whenever making any decision.try to imagine how the impact would be, Will it be fruitful? Or will it bring more complications to the business? These issues should be pondered over and over again. The option that gives much satisfaction should be followed and finally stand at that. Moreover, reality check is paramount since one will get to know what can happen and what will not happen. Upon making the decision, it is important to get moving on it. Worrying or second guessing will only continue increasing stress yet you have delivered your best (Savolainen, 1999, p.74).
Common mistakes in decision making
There are many mistakes people do when they are making decisions and they should be note to avoid regrets and miscalculations. For instance, people tend to rely too much on expert information and they fail to apply their knowledge and skills to make a sound decision. Often people tend to place too much emphasis on experts assertion forgetting that they have their bias and prejudice which prompt them to make some decisions while leaving out the others. Therefore, to avoid this, seeking information from many sources will help one overcome the challenge. Secondly, overestimating and underestimating the value of information is also another factor that should be taken into account. For instance, the people in authority, parents and experts tend to prompt people to make negative decisions since they believe everything they say is right which not the case. When faced with this kind of problem, you should ask yourself whether they know as much you do especially in that kind of information. More also, you should ask yourselves whether they have ever encountered such kind of challenge before. After pondering over the issues, then one can make the decision based on the premises proven to be right (Savolainen 1999, p.42).
Understanding the value of information received from other people also contributes to erroneous decisions. Whether we agree or dispute it, it’s possible that people usually discount and discredit information which is received from other people and this ends up violating the process of making effective decision. For instance, some of the information that people tend to overlook is the information that usually comes from children and people who work in the blue collar jobs. It’s very wrong because these people may at times paint the right picture of you at the other end of the problem. In these case people may use entirely different perceptions and values in attempt to answer your question. The result is usually a larger perspective of the issues (Savolainen, 1999, p. 51).
The other mistake people do is hearing what they want hear and seeing from the perspective they want to see. For instance, if you tell somebody to close his eyes and then later you ask them the color of the forest, he will say green yet he s red. The same way people want to see things from their perspective. They want to see things from their point of view which is not correct always. Erroneous decisions may culminate from the same and it means that if followed it result to drastic results since the person is basing the fats on his or her cocoon (Fitzgerald, 2002).
It’s always important to listen to your feelings but not reactions or the guts. At times one may make a decision and it is later followed by headaches and stomachaches simply because you did not do the right thing. When such a thing happens you should know that it is your body talking to you since the brain is able to store very huge piece of information. Though it is not possible to retrieve information, the body stores until such a time it is needed. When we want to do something, our bodies will always provide clues and answers through feelings and gut reaction. However, the society we are living in today teaches to ignore such feelings yet they are very important ant in our lives today. Therefore, it is paramount to turn to your intuition and you will find that by the end of the day the decision is right (Savolainen, 1999, p. 64).
Steps of decision making
The first step in decision making is identifying the purpose of the decision. In this case the problem is analyzed thoroughly and determined whether it is worth. Moreover, several questions are formulated to ascertain whether the decision will be fruitful and they include the following:
The exact problem
The scene of solving the problem
Who will be affected by the problem?
Whether the problem have a deadline or specific time line
The second step involves gathering the information. For instance, an organization problem will end up having many stakeholders and the more the people the possible the decision. Moreover, there can be dozens of factors to be involved and which are affected by the problem. The process f solving problems will end up gathering as much information which is related to the factors and the stakeholders who are involved I the problem solving. For the process of gathering information tools and checklists are mainly used to promote the latter (Goleman et al, 2000, p. 49).
The third step involves the principles to be judging the alternatives. In this particular step, brainstorming in attempt to list the possible ideas is usually the best option .Prior generation of idea, the step is crucial in attempt to understand the main causes of the problem and the ultimate prioritization of the causes. For instance, companies do not make decision which reduce profit, instead the decisions which increase the productivity of the company. However, in exceptional cases such decisions would be made in honor of something or somebody. It should be noted that the baseline principles should be identified and related to the problem which is usually at hand. In this stage using cause and effect relationship is accepted and also the Pareto Chart tool. The cause and effect relationship diagram helps to identify the possible problems of the company (Goleman et al, 2000, p. 62).
Fourth stage is principles for judging the alternatives that should be set up. For instance, when it comes to the goals of the organization, corporate culture should be adopted and take into consideration. For instance, profit is among the organizational goals where corporate culture is usually taken into account. For instance, profit is one of the main concerns which should be taken into account in every company and the decisions made should be oriented to the latter. The fifth stage is whereby one uses judgments principles to make decisions in attempt to evaluate each alternative and value its credibility. After evaluating them all, you ultimately end up with the best solution and finally implement that particular decision. The sixth step involves selecting the best after going through all the other procedures. After doing all these it is possible to come up with a good decision. Next it’s the executive decision which is the seventh stage; it involves converting the decision or plan into sequence of activities. It also involves executing the plan yourself with the help of the subordinates. Next in the stage is the evaluating result which involves evaluating the outcomes of your decision and seeing whether there is anything it should be learnt in attempt to make correct decision in future. The procedure is one of the best practices it usually improves the skills needed in decision making. Following the above procedure it becomes easy to make decisions in the long run. Business decision making is important since it makes work easier I the long run (Goleman et al, 2000, p. 85).
Strategies of decision making in Business
Systematic analysis affirms that analysis it is good not good to assume analysis and information in attempt to make decisions quickly. Basically, systematic analyses involves collecting a lot of information as one can and later analyzing it in ordered and logical way and find the best option. Managers can actually prepare themselves in attempt to make to make quick decisions through practicing pre-decision making. The analysis and intuition should not match though at times they do not match (Fitzgerald, 2002).
Second, it’s the principle based decision making though it is not widely used in these days. It relies heavily on personal beliefs and principles especially ethics. Unlike the ethical or moral; decision making, the principles used in these case may be unethical or else to unethical outcomes. The two step stats with beginning of the communication process and it ends with application of such principles. Company missions, statements and goals usually provide the principles which the process of decision making. Such principles are vital since they help the business to cope with challenges that happen over time. Such challenges may include, shifting in leaders, fluctuating styles of leadership among others. Strategic style of decision making is also another mode of making decisions. It involves major decisions which affect the entirety of the company. Some of the decisions that the style should adopt include strategic alliances, mergers among other major decisions which are usually handled by the CEO (Fitzgerald, 2002, p. 35).
Significance of effective decision making in a business
In each and every action there are repercussions associated. When you make a good decision, it is possible that you will experience good results and the same happens when you make bad decisions. In business good decision is that which improves the business in terms of profit and the same time the welfare of people is taken into account. When a bad decision is made, the business does not only lose revenue but at the same time it leads to collapsing of the business. Mostly, the managers and the chiefs’ executive officer are responsible for making decisions which will help in development of the business. At times business wisdom is actually hard, but at times, it is important to get the employee feedback since it will be useful in implementing core decisions (Petersen, 2002, p. 83).
Therefore, implementing is the best decision upon evaluating all the alternatives that would yield to the best outcome for the company. Work force decision are the most important when it comes to decision which are long-term. These decisions can either make or break the company and therefore, it is important to choose the best decision. For instance, escalating the cutbacks and increasing the workforce is an important issue and it should be taken into account noting that any cases of employees are never easy. There are usually very important questions that managers should ponder through before they make decisions. The same pattern of reasoning and logic should apply to all situations and by doing that; it becomes extremely easy to over thrive in the world of business. Hasty decisions which are made without effective research usually contributes to ruining of the business or organization. Quick decision cannot be done at many cases, and when they are high cost is incurred. Moreover, lengthy decisions can contribute to the breaking of the company. Therefore, the best decision is that which can be done within a stipulated amount of time with minimal resources wasted. Moreover, any decision made should be guided by the morality codes or what is commonly known as ethics. When managers implement decision which has less conviction, they end up losing the respect from their employees. However, even if the decision made is wrong but with the conviction of the employees it ultimately becomes accepted. This particular form of leadership does not only promote loyalty but it also stimulates performance in the overall in the organization (Goleman et al, 2000, p. 77).
At normal circumstance, business operates in for phases which include; the start up phase, emerging phase, the growth phases and finally the high growth phase. As the CEO Manager, it is important to acknowledge that the phase of the business which your business or company lies. Young businesses which are growing should be spearheaded by people who what they are actually doing and finally they end up becoming successful in the line of specialization. Business which are slowly clambering through the growth ranks and it has started to emerge is said to be in booming growth stage. On the other hand, high growth business is that which requires the counsel of the executive members in attempt to strategize goals and mission of the company (Petersen, 2002, p 49).
Good business decision is that which is involving every party and it leads to increased motivation within the company. When the junior are consulted by the senior staff, it feels good and they can easily be motivated to work for the company more and more. For instance, the issues concerning the workforce, it is good to consult them since they will give good feedback which will promote effective decision making. Moreover, where the decision is good, harmony and understanding is evident and in the long run the business grows without measure. Therefore, consulting the junior staff is paramount in attempt to make wise and effective decisions. Finally, employee input is highly determined by decisions made in the business. When the decision is favoring them, it is possible that the employees will even come up with strategies which will boost the growth of the business. In such a scenario, everybody will be working towards the growth of the enterprise (Fitzgerald, 2002, p. 38).
In conclusion it’s evident that that business decision making is paramount to sustainability and growth of the business. Good decision often harbor growth and enhance morale and participation among the workers.However inefficient decisions will lead to the detrimental of the company and mostly nothing much will come out of the business. it should be noted that Consultation goes hand in hand with information since one has to get sufficient information before making the decision. It involves seeking advice from different people especially the experts since their knowledge is pivotal to effective knowledge. Moreover, there are various aids which facilitate making information better and clear as analyzed. Numerical facts are at times very crucial when making a major business decision making since it reduces the cases of subjectivity and at times it enhances free thinking. Following god decision making guidelines will ultimately lead to effectiveness and efficiency in business. However, lack of effective consultation will lead to the down fall of the business
Fitzgerald, S. P. (2002). Decision making. Oxford, U.K.: Capstone Pub..
Goleman, D., Kotter, J. P., Heifetz, R. A., Goffee, R. a., & Bennis, W. G. (2000). HBR’s must-reads on leadership. Boston, Mass.: Harvard Business School Pub. Corp..
Greco, S. (2012). Advances in computational intelligence 14th International Conference on Information Processing and Management of Uncertainty in Knowledge-Based Systems, IPMU 2012, Catania, Italy, July 9-13, 2012. Proceedings.. Heidelberg: Springer.
Petersen, J. V. (2002). Absolute beginner’s guide to databases. Indianapolis, Ind.: Que.
Savolainen, V. (1999). Perspectives of information systems. New York: Springer.
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