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Decision Making: Concepts and Practices Essay

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Updated: Jun 2nd, 2020

Introduction

The process of decision making is an integral part of the management in business due to its function and steps taken to accomplish the simplest tasks using frameworks and models usually applied in similar cases. In other words, a well-structured process of decision making enables managers to solve problems in the shortest possible time involving the most sufficient resources including labour force and financial basis. Every step of the decision making requires specific actions; for instance, problem definition is the primary step that should be taken which means that a problem that was not defined is not a problem and should not be approached and solved. In this respect, every problem is defined, alternatives are outlined, the most adequate decisions are chosen and implemented into practice. Finally, the process of decision making includes assessment of the effectiveness of the model applied to the problem.

Analysis of Theories

Theoretical framework. As theory is an important part of every decision, it is necessary to evaluate the way companies and individuals that are responsible for decision making and management perform the decision making processes in accordance with different models. As suggested in the study by Ornstein and Lunenburg (2007), “Decision making [is] universally defined as the process of choosing from among alternatives…” (p. 154) when referring to the process of decision making in educational administration. At the same time, such processes as “planning, organising, staffing, directing, coordinating, and controlling” involve active decision making as well (Ornstein & Lunenburg, 2007, p. 154).

For instance, Herbert Simon describes three stages of the decision making process as follows: intelligence activity, design activity, and choice activity whereas Henry Mintzberg defines similar stages as identification phase, development, and selection phases (Ornstein & Lunenburg, 2007, p. 155). A classical decision making model described in the study by Ornstein and Lunenburg (2007) includes the following stages problem definition, generation of alternatives, evaluation of alternatives, selection of alternatives, implementation of decision, and evaluation of decision (p. 156). At this stage it is necessary to question whether it is really important to evaluate the decision after having implemented it in practice or not and what can be the results of not evaluating it after implementation.

Every model used in business is either the one that was used effectively by other companies in the same business or in related sectors or a new approach generated over the time using experience of ineffective application of decision making methods. As such, a question rises about the competitive advantage rises concerning the same model applied by different companies. For instance, as reported by Shanley (2004), the investment of companies is usually based on similar decision making models which allow the firms to evaluate their opportunities for investment and “build a portfolio of companies with similar customer bases” (p. 41).

In this respect, it is impossible to solve problems in a more effective way than the competitors do. So, the main aspect of effective decision making in the similar conditions with competitors involves the difference in employee training, qualification of staff members, and flow of fresh ideas into the group decision making. Group decision making process is regarded as a process of reaching a universal decision by a group of decision-makers in the study by Herrera-Viedma, Chiclana, Herrera and Alonso (2007).

Some decision making models are more appropriate for less stressful situations while others may be helpful in solving more urgent problems related to high stress. A decision making model based on the decision making process is the “four-step decision making process” also referred to as “Observe – Orient – Decide – Act (OODA)” (Lovrek, Howlett & Jain, 2008, p. 2). However, this is one of the models that are claimed to be inadequate “to describe decision makers in extremely high-stress situations that require immediate action” (Lovrek, Howlett & Jain, 2008, p. 2).

More high-stress situations require another approach to the decision making process. The study by Glöckner and Betsch (2008) focuses on the analysis of deliberate and automatic decisions in the process of decision making as integral parts of this element of management. As such, consumer behaviour is rather automatic and intuitive while the process of decision making as a component of management involves deliberate reflective decision making.

Every component of the decision making process should be well-coordinated in terms of the group decision making activities that require common efforts and ability to generate creative alternatives and assess their applicability to the situation under discussion. The more an employee is focused on the process of reaching a certain outcome, the less effective can be the results of the decision making activity. This is one of the reasons why most decision making models focus on the decision making process rather than on the outcomes that can be potentially reached. In this respect, the consumer behaviour is analysed with the help of decision making models to evaluate the main motives of consumers.

At the same time, another important concept that should be considered by marketing managers involves consumer decision making models because they influence the marketing management decision making process (Wiereng, 2008, p. 10). Kim, Ferrin and Rao (2008) analyse the risk and decision making process concerning consumer behaviour for online commerce. Study by Chiclana, Herrera and Herrera-Viedma (2001) dwells on the multiple criteria in decision making and analysis of preferences. So, consumers are measured as decision makers in terms of their decisions affecting the company’s performance in this or that way.

Sometimes, it happens that a problem consists of many different parts when each part should be approached as a single problem. In this case, the large problem should be addressed with the help of a decision making model aimed at solving all the problems that are parts of the large one. Multi-attribute decision making model is assessed by Zavadskas, Kaklauskas, Turskis and Tamošaitiene (2009) who consider that applying a decision making model is important while solving each problem as a part of the multi-attribute one. The more smaller parts the problem has, the more well-structured should be the process of decision making. Consequently, a well-organised process of decision making is the basis for effective decision making that influences the final stage of management.

Decision making can be addressed as the way of solving the problem and it really is. Every concept in the decision making process is a part of the process and should be approached in a well-structured way. As suggested in the study by Wiereng (2008), decision making is the concept on which all other issues of the marketing process are based. The benefits of decision making include ability of the group of professionals to externalise their ideas which facilitates the task of choosing the most appropriate modelling approach (p. 534).

Moreover, the author emphasises the importance of mental models in decision making for marketing managers when they “develop these models through trial and error over years of experience” (Wiereng, 2008, p. 534). This means that time is necessary to introduce the most effective model of decision making into practice in order to reach effective problem-solving and decision making. Experience of other companies can be implemented though the current situation in business includes threat in terms adaption of other companies’ ideas into operation because most of them are patented and this can lead to tough sanctions towards the company that decides to implement others’ strategies.

Conclusion

The most influential concepts in the process of decision making include definition of the problem as the primary stage of the process and the problem as the concept that should be assessed in terms of its potential threat to the organisation, management, and other structures within the company that may be affected by not-solving the problem. Another concept that should be considered includes alternatives because they can concern any area of activity in the company and the alternatives related to the problem itself and the process of decision-making when decision makers try to solve the problem and find the most adequate way to do that. Choosing the most appropriate design for decision-making and potential decision that can be applied to the problem to solve it is another concept existing in the process of decision-making.

Reference List

Chiclana, F., Herrera, F., & Herrera-Viedma, E., 2001. Integrating multiplicative preference relations in a multipurpose decision-making model based on fuzzy preference relations. Fuzzy Sets and Systems, 122, pp. 277–291.

Glöckner, A. & Betsch, T., 2008. Modelling option and strategy choices with connectionist networks: towards an integrative model of automatic and deliberate decision making. Judgment and Decision Making, 3 (3), pp. 215-228.

Herrera-Viedma, E., Chiclana, F., Herrera, F., & Alonso, S., 2007. Group decision-making model with incomplete fuzzy preference relations based on additive consistency. IEEE Transactions on Systems, Man, and Cybernetics—Part B: Cybernetics, 37 (1), pp. 176-189.

Kim, D. J., Ferrin, D. L., & Rao, H. R., 2008. A trust-based consumer decision-making model in electronic commerce: the role of trust, perceived risk, and their antecedents. Decision Support Systems, 44, pp. 544–564.

Lovrek, I., Howlett, R. J., & Jain, L. C. eds., 2008. Knowledge-based intelligent information and engineering systems. 12th International Conference, KES Zagreb, Croatia, September 3-5, 2008: Proceedings, Part 11. London: Springer.

Ornstein, A. C., & Lunenburg, F. C., 2007. Educational administration: concepts and practices. 5th ed. Belmont, CA: Cengage Learning.

Shanley, R. P., 2004. Financing technology’s frontier: decision-making models for investors and advisors. 2nd ed. Hoboken, NJ: John Wiley and Sons.

Wierenga, B. ed., 2008. Handbook of marketing decision models. New York, NY: Springer.

Zavadskas, E. K., Kaklauskas, A., Turskis, Z., & Tamošaitiene, J., 2009. Multi-attribute decision-making model by applying grey numbers. Informatica, 20 (2), pp. 305-320.

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