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7 Steps To Make An Effective Decision For Business Success
A major part of decision making involves the analysis of a finite set of alternatives described in terms of some evaluative criteria. These criteria may be beneficial or costly in nature. The problem that may be involved is to rank the alternative in terms of how attractive they are to the decision maker(s) when all the criteria are carefully looked upon simultaneously.
Another goal may just be to find the best alternative or to determine the relative total priority of each alternative (for instance, if alternatives represents projects competing for funds) when all the criteria are considered simultaneously. Solving such problems is the focus of Multi-Criteria Decision Analysis (MCDA) also known as Multi-Criteria Decision Making (MCDM). This area of decision making although is an old one and has attracted the interest of researchers and practitioners and yet, it is still highly debated as there are many MCDA/MCDM methods which may yield very different results when they are applied on exactly the same data.
Problem Analysis and Decision Making
It is very important to differentiate between problem analysis and decision making. They both have different concepts. The first one to be done should be the problem analysis before decision making.
- Problem analysis: it is important to analyze performance and know what the results should be. The problems discovered are merely deviations from the standard of performance. The problem has to be identified and described, as they are caused by some change from distinctive features. The cause of the problem is the one that has all the needed facts.
- Decision making: in this case, your objectives must first be established, classified and placed in order of importance. Alternative actions must be developed and evaluated against all objectives. The alternative that is able to achieve all objective s is the tentative decision, which is evaluated for more possible consequences. Additional actions need to be taken in order to prevent any adverse consequences from becoming problems and starting both systems (problem analysis and decision making) all over again.
The act of making an effective decision involves a process. Most organizations operate by people making decisions. A business manager makes plans, organizes, staffs, leads, and controls her team by executing decisions. The effectiveness and quality of those decisions determines how successful a business manager will be. Managers are always called to make decisions in order to solve problems. Decision making and problem solving are on-going processes of evaluating situations or problems, considering alternatives, making good choices, and following them up with necessary actions.
The entire decision making process is dependent upon the right information being available to the right people at the right times.
The decision making process involves the following steps:
1. Define the problem: an accurate definition of the problem affects all other steps that follow, so you need to be careful in understanding what the problem is.
2. Identify limiting factors: business owners want to make the best decisions. In order to achieve this, the needed resources has to be available; information, time, personnel, equipment, and supplies.
3. Develop potential alternatives: a business manager should think and investigate alternative solutions to a single problem before making a decision. One very important method of developing an alternative is through brainstorming, where a group works together to generate ideas and alternative solutions. The process of brainstorming within a group of business individuals involves concentrating on the problem at hand and entertaining every idea.
4. Analyze the alternatives: the business manager needs to evaluate each alternative in terms of its feasibility, effectiveness and consequences of the decision.
5. Select the best alternative: after analyzing all the alternatives, the business manager must decide on the best one. The best alternative is the one that produces the most advantages and few disadvantages. The selection process may not be straight forward sometimes.
6. Implement the decision: managers are paid to make decisions, but they are also paid to get positive results from the decisions made. Everyone needs to ensure to participate in a role to get a successful outcome. To make certain that the employees understand their role, managers must thoughtfully devise programs, procedures, rules, or policies to help them in the problem-solving process.
7. Establish a control and evaluation system: an evaluation system should provide feedback on how well a decision is being implemented, what the results are and necessary adjustments to be made to get the results that were intended when the solution was chosen. If the manager’s plan hasn’t resolved the problem, he needs to figure out what went wrong.
From a normative perspective, the analysis of individual decision is concerned with the logic of decision making and rationality and the invariant choice it leads to. Therefore, decision making is a reasoning or emotional process which can be rational or irrational and can be based on explicit assumptions or tacit assumptions.