Application of Critical Thinking to Business Analysis

Categories: Thinking

Critical thinking is the basis of business analysis. It involves a force of habit, which determines the quality decision that the business analyst makes. Critical thinking is what enables businesspersons to think through challenges and situations. Because of this, critical thinking is vital element that should be refined, nurtured and actively implemented in every business analysis and decision making process. For the analysts to make decisions with the greatest outcome they should apply critical thinking since it involves rational reasoning and reflective thinking.

It enables them to put every aspects of the decision into consideration in terms of the pros and cons of every option to be taken. Critical thinking initiates opportunities through exhaustive analysis thus leading to making well-informed decisions. It helps manager avoid the inconvenience of learning through experience. It assists in planning effectively while putting everything into consideration. It helps the administrators save on costs by mitigating on mistakes that could cost the company to incur extra costs.

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Critical thinking is important in business analysis because it involves assessing, reflecting, planning and making right decisions while paying attention to details (Nosich, 2012).

Critical Thinking in the Context of Business Analysis

In order for the efficient implementation of business, it is important to understand the meaning of business analysis. Business analysis therefore refers to a set of techniques and tasks implemented by the various stakeholders. The main purpose of the implementation is to understand the operations, policies and structure of a particular business entity. It also involves the recommendation of various solutions in order for the organization to achieve various goals that it has set forth to achieve.

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Business analysis therefore entails the understanding of the ways in which various organizations carry out their operations. Production of products defines the capabilities of the organization. These products entail specific goods and services offered in the present market within which the organization is conducting its operations. External stakeholders also play a major role in the product distribution chain of a particular product. For a successful business to prosper, various key steps need to be implemented for a. These strategies require a critical analysis, which will involve the applications of virus concepts of critical thinking (Smith, 2003).

In any organization, it becomes very important to define the goals of the organization. The organizational goals relate to the specific objectives set forth. These goals help in the achievement of the goals designed. It also becomes necessary for the team in charge of making various policies and decisions to focus on the various actions that the organization is going to adopt so that it can achieve its set targets and objectives. Finally, it is important also to define how various external entities to the business will interact with each other. For instance, in this particular case, stakeholders and organizational units outside and within the organization will require definition and the mode of interaction defined. Business analysis aids in the understanding of an organization’s current state. It also provides a platform to identify future prospects of business needs that may arise. However, in most cases, the principle aim of conducting business analysis is to validate and provide business solutions that conform to the objectives, goals and needs of a particular entity.

The synthesis and analysis of information provided by numerous number of stakeholders tops the priority list. The various business analysts then analyze it. These particular stakeholders include customers, executives, IT professionals and staff. Critical thinking is therefore involved in various process of business analysis. A business analyst has the responsibility of obtaining actual needs from the various stakeholders. The particular process involves an actual distinction with the various desires expressed by particular stakeholders. The business analyst also facilitates the communication and interaction between various units in the business. It therefore means that through critical thinking, a business analyst is able to foster communication and interaction between various business units. It becomes possible through the alignment of various business unit needs. In the business process, the process lightens by the integration of information technology. It serves as an interpreter and a translator between the groups (Smith, 2003).

The competitive nature of any business entity originates from the various policies that exist in order to counter competition from various companies. Competition arises due to various factors. Some of these factors include a company offering complementary and supplementary goods, similar to their rivals. In this particular scenario, there is always competition for the market share. Elimination of one firm in this competition may occur if there is no application of critical thinking to devise survival ways to counter such a move. Price becomes a determinant factor when it comes to competition between two rival industries competing for the same market share. Another reason as to why competition arises is the difference in pricing of similar commodities. A rational consumer is always attracted to a firm, which is selling cheaper than others are. Price is a significant determinant of product choice. Majority of the rational consumers exercise the power of choice when products occur in a wide range (Smith, 2003).

Majority of the business operations operate based on the types of decisions made across all the levels of production. Critical thinking forms the baseline upon which various policies formed and implemented. The success of a business entity becomes relative to a number of factors that help it be at a competitive level with other businesses in the same industry of operation and service. Several elements exist that become fundamental when implementing critical thinking to help the organization. Critical thinking involves the analysis of the current business operations, procedures and policies. The mastery of this particular process makes it possible for the business analyst to be familiar with the operations that are taking place. It also involves the identification of errors that may have occurred which led to the company not achieving its dreams. Moreover, apart from analyzing the internal factors of the firm that affect its operation, business analysis also focuses on the external environment that may affect the operations of a certain business entity. Inward communication strategies, pricing policies, production processes, marketing and branding are internal factors that affect the business entity (Smith, 2003).

An analysis of the external environment that includes the political environment, competitors, the economy of a particular country concerning inflation and budget allocation also play a very important role. These may influence the pricing strategy pf a particular company. The political environment also determines the way in which the company interacts with various other companies overseas in terms of the taxes charged on imports and exports. It therefore narrows down to the fact that critical thinking contributes towards the existence of majority of the industries and companies in the world. The study of the market structures to determine the appropriate time for trade is what distinguishes a successful company from a failing company. The ability to fore see a coming calamity and danger and be able to efficiently plan is what critical thinking entails. In the end, it saves the company many resources since evasion of eminent dangers occurs through future prediction. Critical thinking is an attribute of various business analysts. The presence of these personnel in an organization is important. They constitute the think tank of any industry (Smith, 2003).

The application of critical thinking in a business environment happens through all the levels of management. At the strategic level, critical thinking may focus on issues that affect the company in general. At the operational level, critical thinking entails the unique creativity that may exist if a company decides to adopt product differentiation or diversification to have a range of commodities in the market. By giving a rational consumer a wide pool to select from, the company is able to face out different companies, which are providing supplementary products. It is able to wholesome reap from the market all the customers who have great trust in the product that they offer. Critical thinking is always neglected because majority of the companies only react when faced with certain risks. For instance, if the profit margins of a company begin to decline considerably, the management of the company becomes alarmed. At this time, they invest in quick decisions that aim at the company regenerating various incomes. It is always a very poor form of responding and managing o frisks. In an ideal situation, the company is supposed to preview their previous strategies and look for elements that contributed to the decline in the revenue gained. After the identification of the various stated problems, an in depth analysis is to be conducted to determine the facts. Critical thinking plays a major part when it comes to the redefinition of the various goals and objectives. These elements are important to ensure a competitive state of the organization (Nosich, 2012).

The success of a company is, therefore, dependent on the various decisions made from all the levels of production to management. The careful analysis of various problems that a company faces undergoes analysis and various solutions proposed in an efficient way as opposed to a quick manner. Using this channel, a company is able to get maximum returns from the various activities that it conducts. There are increased chances of lack of fear when it comes to the anticipation of problems. Critical thinking is the center of an organization’s success. The ideas of inventions and product creation derived from a panel composed of individuals explain the importance of critical thinking. Those who think critically through particular scenarios provide a solution that earns the organization maximum massive profits. The strategies in all the organizational units implemented are a success because of the decisions made by the members of a particular panel. Marketing, sales and even production departments all require various skills in critical thinking to produce products that are highly profitable to the organizational entity as a whole. This document therefore recognizes the importance of critical thinking when it comes to the analysis of different business operations to achieve various goals and objectives (Smith, 2003).


Business analysts use critical thinking to make effective and efficient long term and short term plans for the business organizations. In order for the business managers to make decisions and plans for the business they have to think critically in terms of their objectives and goals in relation to the resources a business firm has. Managers have to think critically so that they can predict the possible threats that the business might face and be able to formulate their respective solution in time. The managers have to ensure that the challenges find the firm adequately prepared. For this to happen there has to be a lot of thinking in the planning process. The administrators have to consider every aspect of their plans in order to come up with short term and long term plans. Critical thinking is what ensures that required measures have been put in place to make a firm prepared for the challenges. Critical thinking helps the administrators to come up with the time frames for the long term and short term plans. Critical thinking makes the plans achievable and it helps in the identification of plans and investments that are not viable (Smith, 2003).

Business analysts in conforming valid requirements also apply critical thinking. It enables the business analysts and managers to pay attention to details and not the face value or what they hear. Critical thinking enables the administrators to weigh up the evidence produced by stakeholders with relation to the challenges and consequences before making decisions or recommendations. It enables the manager to be future oriented since they have to consider the impact of the decisions or options they take. They have to consider the deadline, available resources and the possible outcome of the requirement. Through critical thinking, administrators go for what the business entity really needs and not what they want. This aids in prevention of unnecessary costs that would have been caused by purchasing excess requirements. It also helps businesses in avoiding wastes (Nosich, 2012).

Critical thinking is applied in risk prediction, prevention and mitigation. In planning for the likely risks and hazards that a firm might face the analysts and administrators have to think carefully. They have to think critically to identify possible risks and formulate respective measures and solutions, which can be used to prevent them. Critical thinking in such situation is aided by acquisition of information from other similar firms that have existed in the market for longer periods. Critical thinking enables administrators to implement safety measures in the firms such as emergency doors, exists, fire extinguishers, gloves and aprons. It also enables business firms to determine the right time to enroll in the markets and the right time to withdraw. It enables companies to avoid financial risks, as managers are able to plan and make the right decision (Smith, 2003).

It is also applied by the busyness analysts in the seeking solutions of business challenges. Businesses face challenges from time to time. The challenges range from financial, human resource conflicts with other firms and so on. To overcome these tough times the business managers have to think critically and formulate long lasting solutions that will save the companies fate. Conflicts are normal in the Business administration but they require rational thinking and decisions so that they can be overcome. Even the internal conflicts in the firms require the administrator to think critically about the situation and make fair decision or advice to the conflicting parties. The administrators have to listen and think first before passing judgment. This will enable him to avoid prejudice or bias in the decision made (Nosich, 2012). The leaders at the same time have to think and come up with policies that may hinder external and internal conflicts in the firm.

Critical thinking is applied in the shortening life cycles of businesses projects. Through it managers are able to determine the required time frame and ensure that the projects move as per the stipulated time. Managers are also able to avoid unnecessary events and occurrences, which have the possibility of delaying the business projects. Critical thinking ensures advance planning and as a result, there is order in the running of the firms. The advance planning ensures everything moves as per the scheduled time and this helps in saving time and shortening the life cycle of the projects as only, the necessary cycles are implemented (Smith, 2003).

Critical thinking is also applied in beating competition from similar firms. In order for firms to have competitive advantages the administrators and analysts have to go an extra mile of being creative and innovative. They have to do the same things extra ordinarily right or they have to come up with new ideas and products that will give them an advantage over their competitors. To do this successful they need to brainstorm and think critically. Managers have to do research and be able to predict the future of the company. This will enable them come up with various ideas and policies that will boost their performance. They have to come up with new marketing strategies and new modes of operations. They have to target more customers and become inventors. To implement this, management has to use critical thinking. They have to consider the weaknesses of their competitors and take advantage of them (Smith, 2003).

Profit maximization and loss minimization can also be enhanced by application of critical thinking. For profit maximization, the business administrators have to be inventors and innovators. They should come up with new ideas and policies that will make their products and services unique from their counterparts. This requires high level of thinking and that is when critical thinking comes in handy (Nosich, 2012). Critical thinking helps in making the right financial decisions hence the company is able to maintain its profits. Critical thinking enables managers to come up with plans that minimize losses and wastage. They help in shortening duration of projects and in the long run increase productivity. An increase in productivity in turn increases the profits.

Business administrators also apply critical thinking in making decisions to do with employment. The management has to determine the required number of employees to be hired and define their specific roles and duties. Critical thinking helps in determining the required number of employees that will provide the most outcomes. Critical thinking assists the manager in employing the employees with the required skills for specific positions. The manager should also know when to scale down and when to add the number of employees. The manager has to think critically of the kind of skill required in the organization before employing a person. Critical thinking helps manager to form the right workforce required for optimum production (Smith, 2003).

The business analysts apply critical thinking in the making of right investment policies and decisions. Before making the right decisions on where to invest, analysts have to think through the possible options and take the option that is most viable and profitable. Critical thinking in this case will help the administrators consider the pros and cons of every investment option. This enables them to make the most informed decision by taking the best option. Critical thinking also helps administrators in assessing and evaluating the progress and position of the firm. It is applied to help managers determine if they are on the right track. Managers are able to determine if they are operating on a loss or profit through critical thinking. They have to think through and determine if the projects are moving as per the stipulated plans and goals. Do determine right progress the managers have to carry out various research and consultation in comparison with data at hand (Nosich, 2012).

Discussion and Conclusion

Various scenarios in the business process have required an individual to apply critical thinking in various business processes. The result of the decisions made in the various panels has resulted into massive goals and targets achieved by the said industries. Companies have been able to rise from various falls while some have succumbed to defeat. New entrants have entered into the marked and dominated the events will the already established monopolistic firms faced out because of this. It is therefore important that a company recognizes the importance of such a key process and invests I it. The using of appropriate skilled experts also goes a long well in helping the industry achieve its goals and objectives. The existence and sustainability of a given organization in the market is highly influenced by the various policies they adopt. Companies have marred up to produce complementary and supplementary products while some faced out. It therefore becomes important that the company look into the various strategies with an in-depth eye with an aim to creating various opportunities and channels for growth and profitability (Nosich, 2012).

Business analysis through critical thinking becomes an effective way of determining the organization’s strengths and weaknesses. The implementation of SWOT analysis in a business environment will be effective upon incorporation with critical thinking. The identification of Strengths, Weaknesses, Opportunities and Time factors require a vision that is not velar by the other firms competing in the same market. In conclusion, this paper finds critical thinking a very important element in the existence of a company in the ever dynamic and competitive business environment. It also views the basis of competition resulting from the difference in the decisions that various companies tackle one particular problem effectively. When companies operate from this basis, they are able to achieve more revenue and expand on their sales. Critical thinking has a direct relationship with the performance of a business. Several aspects in business analysis require the massive application of critical thinking to provide solutions (Nosich, 2012).


Nosich, G. M. (2012). Learning to Think Things Through: A Guide to Critical Thinking Across the Curriculum, Boston, MA: Pearson Education. ISBN: 978-0-13-268359-3.

Smith, G. F. (2003). Beyond critical thinking and decision making: Teaching business students how to think. Journal of Management Education, 27(1), 24-51.

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Updated: Jul 06, 2022
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Application of Critical Thinking to Business Analysis. (2015, Sep 01). Retrieved from

Application of Critical Thinking to Business Analysis essay
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