Background
Scientific inventions and innovations have resulted in better transport and communication systems. The improved systems have facilitated globalization. Globalization is a process of integration of social, economic, and political ideologies into a global network; the term is used to refer to developments that facilitate cooperation among world nations in different spheres.
The rise of globalization can be traced after the end of Second World War, when politicians and economists engaged in vigorous planning aimed at breaking trade barriers among countries thus promoting interdependence.
The Bretton Woods Conference is seen as the first world conference with the aim of laying down international commerce framework; the international monetary fund (IMF) and the World Bank were formed to control the flow of trade in the globe. According to Manfred, 2003, globalization and international trade operates under the paradigms of comparative and absolute advantages; the writer goes further and indicates that globalization is likely to solve world’s economic and social challenges (Manfred, 2003).
However, an article in the British Broad Casting (BBC) news board posted on 7 February 2008 challenged the effects of globalization; the article suggested that it has widened the economic gap between the poor and the rich (Schifferes,2008). Businesses are affected by economic, political and social trends in their country/countries of operation; business decisions are the drivers of an organization. This paper discusses how globalization has affected managerial decision making in modern contemporary business environments.
Modern contemporary business environment, globalization and managerial decision-making
With the economic integration, the flow of factors of production and businesses has been facilitated; improvement in information and communication technologies and transport networks has an impact on modern business environments.
Businesses can now venture in different parts or can transport their goods and services effectively; with globalization, the markets have been enlarged and at the same time, different players have entered into business in different countries. The quality of decisions that leaders of an organization make in the realm of globalization will determine whether their organization will suffer from globalization or it stands to gain.
Managerial decision-making is a continuous practice through which managers forge strategies in their organization or arrive at the best alternative solution to a given challenge facing an organization. One of the major attributes that make a good manager stand out is his or her decisiveness. The quality of decisions made by a manager is reflected in the performance of his or her organization; an effective manager considers the prevailing condition when making a decision.
An effective process of business decision making in contemporary business environment involves the use of scientific theory of decision-making. According to the theory, there are three main stages in making a sound business decision, they are; defining the problem, data collection and choosing the best alternative. Due to globalization, all the stages to decision making has been affected as follows:
Defining the problem
When making a business decision, the first step in making a good decision is defining the challenge, problems vary with different situations. With globalization, a problem should be looked from the global perspective; that is how it has affected the current business in the domestic country and how it is likely to affect the company in other parts of the world (Schulte, 2000). G
lobalization has brought new challenges in business arenas calling for management to be alert and up dated with the current situation in the global markets. There are problems that require either a “no” or a “yes”, others require an urgent solution and others can wait for a certain period for alternative solution to be arrived.
When defining a problem, it is important to involve international players who have undergone similar decisions or consult expertise in different countries using the communication set-ups set by globalization. In this stage, a good context of the problem is grasped. It is only after getting the correct understanding of the problem that he/she can make a good decision.
In modern contemporary business arena, well-defined problem must see the problem from the big picture perspective (global perspective); the management should not concentrate on understanding what is prevailing in their sector or country but should consider what other sectors or countries are going through (Williams, 2001).
Data and information collection
The second stage in decision-making process is to seek information and data from relevant sources to assist in coming up with alternatives. Globalization has facilitated the flow of information from one country, sector or continent to another; this happens through communication networks supporting globalization.
In this stage, the manager should gather all relevant data and facts; with globalization, mangers get access to variety of information, facts and data from other companies or countries that have faced a similar challenge.
It is from the facts and data that leaders develops various alternatives of choices that can be used to solve the problem at hand, alternatives can be derived after an analysis of the results of various alternatives as implemented in other companies who have accepted to share their information. The statistics will also be the ones that will support the final decision (Wheelen and Hunger, 1999).
Traditionally there were various methods of collecting data; they included researching, brainstorming and experimentation, globalization has added other methods of collecting information, which include virtual teams and information databases. Virtual teams are a group of experts in a certain area that work together via the internet with the aim of offering solution to different business problems that fall in their profession.
When managers are deriving solutions, they are consulting these groups; since these groups work over space and time, they offer timely and updated information that can offer effective solutions to business problems. It is the manager’s duty to choose the right method to adopt because different problems call for different methods.
Globalization has opened a business opportunity where there are international organizations working across time and space, they are offering “readymade” solutions to business problems so when a certain business is faced with a challenge then it only need to consult the businesses, an example is the information and technology online firms that are offering customized software to business enterprise.
Depending on the problem, the people to be consulted differ, globalization has opened the floor of consolation to involve international firms and experts. However, an effective manager should ensure that he/she consults those who matter and those who know.
Consultation assists in making a more informed decision and assists in generating more alternatives of choice. Their opinions and viewpoints should be considered in the final decision-making, but the manager should always keep in mind that it is his/her responsibility to come up with the right decision (Williams, 2001).
Choosing the best alternative
With the collected wide range of views and information supported by inputs from the global environment, management should take time and ponder over the issues; time taken depends on the urgency of the decision, using the information, then the best strategy is established. After the strategy has been implemented, lots of support of the decision is required to ensure that the whole organization or the departments concerned have adopted it effectively.
It is not always that a decision made bring the expected results; thus, feedback from the people on the ground and the general performance of the business should be sorted, so as areas that need improvement are recognized. When improving strategies, it is important to consider the global environments and take their views and the effects that will occur with different improvement strategies (Bridge and Dodds, 1975).
Discussion
As economies expand and trade with each other with assistance of improved transport and communication technology, the world is becoming a global village.
Economies are joining efforts to develop an economic, political or/and social block as they prepare to play a role in the global environment, this has in turn affected managerial decision-making process. The main role of managers is to make timely, responsive and acceptable decisions; globalization has created a different business environment than the traditional frameworks of business.
When managers are making decisions, they are forced by the business environment to make decisions that can facilitate competitiveness internationally. For example, when managers are making a decision on the right marketing strategy to adopt, they should be considering both local and international markets. Different countries calls for different marketing approaches; this offers managers a challenge to think about the approach strategy from a macro point of view (Schulte, 2000).
Globalization has come with solutions to business problems; in contemporary decision making, manager are considering the available solution in the markets since they have come to facilitate smooth running of business.
For example, globalization has resulted to a number of outsourcing services businesses like international businesses. When managers want to make an international transaction that involve the transportation of goods from one country to another, among their alternatives will be the logistics companies operation in the economy.
Globalization has brought issues of political and social dimensions in decision-making; when managers are making decisions, they have been forced to consider the effects that the decision will have on the social, political and environmental dimensions of the global population. For example, when selling in international market, managers should have culture intelligence tools and use it when making decisions.
The business environment created by globalization call for managers to have a wide knowledge of current business trends; they should consider things from a global perspective when making business decisions (Schulte, 2000).
Conclusion
Decisions are the driving force in an organization; with globalizations, managers should interpolate the prevailing conditions effectively to come up with timely and effective decisions. The quality of decision that managers direct and focus their organizations; the growth and competitiveness of an organization is influenced by the quality as well as acceptability of decisions made by managers at all levels. To come up with a good decision there are three main stages that a manager should follow they are, defining the problem, data collection, and choosing the best alternative.
References
Bridge, J. & Dodds., J., 1975. Managerial decision making. London: Taylor & Francis.
Manfred, B., 2003. Globalization: a very short introduction. Oxford: Oxford University Press.
Schifferes, S., 2008. Globalisation splits rich and poor. Web.
Schulte, J. A., 2000. Globalization: a critical introduction. New York: Palgrave Macmillan.
Wheelen, L. & Hunger, J., 1999. Strategic Management and Business Policy: Entering 21st Century Global Society. Massachusetts: Addison Wesley.
Williams, S., 2001. Making better business decisions: understanding and improving critical thinking and problem-solving skills. London: Sage.