Decision Making in Business in a Nutshell

Decision Making in business is quickly transforming. Companies are investing more time and money in improving decision making processes and measuring the effectiveness of decisions.

We wanted to summarize what decision making in business involves.

Important business decisions impact one or more of the following:

  • - Directors / shareholders / owners
  • - Employees
  • - Customers
  • - Affiliates / partners
  • - Suppliers
  • - Community
  • - Legal / Government

Types of important business decisions:

  • - Employee management (hiring or sacking of staff)
  • - Organizational changes
  • - New vendor procurement
  • - New product purchase
  • - Capital expenditures and investments
  • - Infrastructure
  • - New product development and sales
  • - Developing and approving new business processes and policies
  • - Mergers and acquisitions

Characteristics of important business decisions:

  • - Multiple decision alternatives
  • - Alternative outomes that are hard to measure
  • - Multiple criteria to consider
  • - A lot of research is required
  • - Some of the decision criteria have priority over other criteria
  • - Lack of expertise on a subject

How important business decisions are made:

  • - Basic self-analysis: One person just weighing up the pros and cons without any hard data
  • - Thorough anlysis: Using large amount of data
  • - With input/collaboration from appropriate people
  • - Without input/collaboration from appropriate people
  • - Gut feel
  • - Combination of above

What is required to make successful decisions:

  • - Understand the issue
  • - Gather information: Get the relevant data, reports, insights analysis required
  • - Define alternative outcomes
  • - Define criteria to be used in evaluating alternatives
  • - Weigh importance of criteria
  • - Evaluate each criteria of each alternative
  • - Quantify overall rating of each decision alternative
  • - Compare and rank decision alternatives
  • - Make the best possible decision based on research and the decision process

Risks of making bad business decisions include:

  • - Significant financial loss
  • - Negative impact on customers
  • - Negative impact on employees
  • - Negative impact on company reputation
  • - Injuries to employees or customers
  • - Costly legal proceedings
  • - Product recalls
  • - Business interruption

Looking for a decision making platform that can track and measure the effectiveness of your organization's decisions? Try Hexigo for free!