What are the basic principles of business decision making?

Decision makers need to gather information relevant to the decision.

The business decision-making process usually contains several steps. While every decision may not require every step, some of the steps definitely apply. The first stage is to identify objectives, gather information, and analyze options for decision outcomes. The second stage involves choosing a course of action, communicating and implementing the decision, and evaluating the results. Owners and managers are typically the individuals who carry out the business decision-making steps.

While an individual may have the final say on a decision, a business committee can also play a role in the decision process.

Goal identification occurs when a company needs to change its operations. A decision may be needed to improve a product, enter a new market, or hire new employees. Whatever the case, decision makers need to identify the desired outcome. Higher profit, better product quality or better market position can be objectives for business decision making.

Owners and managers are typically the individuals who carry out the business decision-making steps.

Decision makers need to gather information relevant to the decision. Specific goals lead individuals to certain information gathering processes. Timely, relevant and valid information is needed to make a decision. Reviewing information at different stages can help people determine when they have adequate data for making business decisions.

Analyzing the information collected is the final step before making a decision. Decision makers analyze the different outcomes and determine which is best for the company. Gathering additional information may be necessary to answer questions about possible decisions. Ideas are also needed to determine the best course to implement a new decision.

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Choosing a course of action is the first step in the second stage of business decision making. Decision makers select the best option for the identified objectives and planned outcome. While an individual may have the final say, a business committee may also participate in the decision-making process.

Owners and managers communicate and implement the decision to all necessary parties. Once communicated, implementation plans go into effect. Business decision making ranges from the decision makers to the staff needed to carry out the tasks. Decision makers usually oversee the process to ensure that all necessary steps are taken to achieve maximum decision outcomes.

An evaluation process is the final stage of the business decision-making process. Decision makers use this step to review a fully implemented decision to determine how well the company has benefited. Evaluation is also necessary to make small adjustments to the decision process. In some cases, a company may need to stop the processes resulting from the decision because the results are not what is desired or expected.

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