Abstract
The study deals with fundamentals of decision-making process in the context of business. Further, it also highlights the salient features and parameters that impact a decision in the context of a company named Facelift Limited which deals with furniture.
Introduction
Decision making is an imperative part of the administration. Let it be any institution, educational or business, making a decision and putting it into practice is a fundamental feature for its proper functioning. Decision-making is a process that results in the selection of the best choice among several alternative possibilities. It is self-explanatory in the decision-making process, the final choice depends on the management. The management decides whether to promulgate the decision or not, and this will help perfect implementation without causing any dispute. A good decision can be made only by a good leader or a manager. Decisions can be made autocratic or democratic. For a decision to have fewer disputes during the implementation phase, it should be democratic. So, a good decision-making makes a perfect leader as well it plays a vital role in achieving goal.
The definition of decision making is a derivation of a study of recognizing and selecting alternatives that are based on the values and fondness of the decision maker. When we make decisions under any circumstance, there are choices that can be implemented always. In this process of the decision-making, there are plenty of alternatives. Multiple choices and alternatives make it more amenable for the subordinates to accept the decisions. It is also required to consider a solution for decision best fits with our goals, desires, morality, and values.
It is problem-solving activity that terminates any differences by finding a just and satisfactory solution. The problem solving skill should meet the expectations of causing any quarrel in future. Hence, decision making has to be done in an effective way. It is understandable that the decision making is a shrewd process where lucid or absurd matters will not have a place. All decisions are followed by some form of cost-benefit analysis and should not deviate from the final objective of the administration.
Steps of decision making
- Judgment deals with the final decision taken considering all the practical factors.
- Choice deals with picking up the preferred option from many alternatives.
The step-by-step process of decision making involves multiple factors. In order to explain it in a better way, it makes good sense to present systematically. These systematic presentation are:
Based on this presentation, it is pertinent to explain each of the elements in details for better appreciation and analysis.
a) Recognize the problem: Understand a problem in its pure aspect is the foundation to solve any problem and thereby take a decision. In any institution, the management may be facing certain issues that need tactful solutions to be implemented. Problems can be between employees and employers. So, recognition of a problem in its true version is the primary step to be undertaken in making an appropriate decision. The reason behind any dispute has to be identified in a proper manner without underestimating or without considering any of the parties involved in the dispute. In this case, it is the duty of a team manager or a leader, representing an organization.
b) Diagnosis of the issue: The problem has to be analyzed with a vision of solving the issue as fast and as perfect as possible. While analyzing the problem, one should start the process from the fundamentals of the subject matter. Some of the fundamentals are the source of the issue, the reason behind the issue, how it extended, who are involved, the people affected, and the loss caused, and all these have to be taken into consideration. The problem has to be tackled in most tactful way without affecting any employer, employee and organization.
c) Identify the alternatives: It can be a group effort in which a leader can seek the help of colleagues. Everyone will have their own opinion regarding the issue. The leader can provide them the details of the issue and ask for suggestions on how one can tackle the issue. Everyone will have different opinions. It is the stage that a leader should value each and every opinion of one’s colleagues.
One should never ignore or underestimate any one’s opinion. Here all are valued equal regardless of their designation. Brainstorming is a typical example of such discussions in which all of them come with their own suggestions. In this situation, nurturing environment gets created in which all get a chance encouragingly to present their ideas. But, none gets criticized for their contribution.
d) Evaluating the alternatives: All the suggested alternatives have to be combined and analyzed in the most sensible and practical way. Determining the potential effect of each of the alternative plays a vital role in the analysis. While evaluating, the important factors to be considered are advantages, disadvantages, cost of implementing, duration of effectiveness, and success percentage. Each of the alternatives gets a score based on these factors.
e) Selecting the best alternative: The best alternative will always be the best for the organization. The best alternative will be picked up on the basis of the scores assigned to each of the alternative. It is good to prefer an alternative that weighs much in favor of the organization. After the choice of the perfect solution, the next step is to implement it to the organization. Decision making does not end up with just making a decision but also putting it into practice. A manager/leader must evaluate whether the implemented option go well with all. Hence, the ultimate step in the decision making procedures is verifying the effectiveness of undertaken decision. And, in the process of selecting the best alternative, these decisions always seek the help of feedback from others.
Risk management of decision-making in business
The decision making involves high risk because of the uncertain future of the particular product. The previous experience of the manager together with the market research information helps them to predict unforeseen future events and outcomes of the product. However, all business activities have some constituent of risk. At the end what matters is the balance between the profit outcome and the risk taken.
In this case, the decision has to be taken by the managers whether to develop the new brand, or modify the existing brand, maintain it, allow it to decline, or even kill it off.
All these decisions are to be taken in consent with the other persons involved. While a new brand is developed, it is the responsibility of the managers to take stern decision regarding the successful outcome of the product. Responsibility is exclusively relies on the brand managers. Thus the managers develop a long-term strategy to meet a range of objectives before taking a decision on the product development. They analyze the growing market share, development of a unique market position, creating a brand loyalty, generating a targeted level of profit.
Facelift Ltd. is a general merchant selling office furniture in the UK market. They have 100 stores with 8,000 employees, and have projected to increase the turnover significantly. As the economic downturn has affected its core business of office furniture, Facelift Ltd. has decided to diversify into the home furniture market.
Brief introduction to the problem
The case study is based on the increase of turnover for Facelift Ltd. I have analyzed the basic information regarding the sale conducted in the last 12 months. A detailed study was done to understand the drawback in the turnover. Decision making is very important in business to keep pace with other competing companies.
Methodology
The methodology for the research includes the usage of basic statistical tools. The correlation and the percentile is calculated using excel formula. The frequency distribution is calculated using the variables such as respondent’s gender, employment status, basic income and the usage of Facelift brand.
Description and justification for the survey methodology in the research
The survey was conducted to understand the basic turnover of the company for the past one year. The data required was analyzed using different mathematical calculations. The following are some of the methods of calculations done.
Correlation coefficient of the sale
The correlation coefficient of the sale was calculated using the excel correlation coefficient analysis formula. Accordingly the sale correlation coefficient was found to the 0.71169
The percentile also was calculated. According to that, the percentile for cabinet was found to the 105 and for chairs it was 185
Facelift Ltd intends to sell 4 types of home furniture and their respective projected turnovers are tabled below:
Line graph representing the data of the furniture sold
Pie chart representing the bed sold in different years. It is estimated that the coming years will have a better turnover in the coming year. Year 2017 is predicted to have a great turn over.
Pie chart showing the sofa turnover of the years 2014, 2015, 2016, and 2017. It is estimated that the year 2017 will have a better turnover.
Pie chart representing the wardrobe turnover
It is visible that the coming years there will be better turn over. As for the other products, 2017 showed a better turn over.
Pie chart indicating the turnover
The data from the pie chart indicate that there will be decrease in the turnover generated by dining table turnover for the year 2017 unlike other products.
Combined bar graph
The combined bar graph indicates that in the year 2014, there will not be much turnover. It is likely to be increased for the year 2015. In the year 2016, there will be another increase in the turnover. Whereas in case of 2017, it will have increase in turnover for sofa and bed, but in case of wardrobes, it remains static. And for dining table, there is decrease in the turnover.
Business strategy growth of Facelift Limited
Ensuring consistent and strategic growth is the hallmark of any organization. So, Facelift Limited is no exception, and it has plans in place to define the targets and devise the multiple growth strategy by channelizing the route in various directions. The main objective of this diversification is to provide quality service to customers by managing and improving the delivery and service system.
In order to bring about this transformation, the company intends to implement a new Management Information System (MIS) for effective and efficient management of customer, product, service, and delivery information. For the purpose of executing this plan of MIS, the company has decided to survey the performance of various firms that offer external support for the information management of domestic and international market. Of these firms, it has zeroed in on two firms - ABC Systems and XYZ Solutions Limited. Some of the salient features of these two firms are:
a) Initial cost of equipment and installation of ABC Systems is £1m, whereas XYZ Solutions Limited is likely to cost initially £1.5m.
b) Operational system of ABC Systems is conventional for domestics market, whereas XYZ Solutions Limited can deal with the exploration of the international market in the future.
c) The projected Cash-flows for ABC Systems in comparison with XYZ Solutions Limited in the year starting from 2014 to 2018 is slightly lower by £50,000 to £100,000.
d) The cost of capital for both options is 5%.
Based on these facts, some of factors and parameters of the project implementation schedule for quality information management system are:
Benefits of MIS for Facelift Limited
The details on all these activities and their duration are tentative requirement for the establishment of quality MIS. Its formation and establishment will offer myriads of benefits for the organization. These benefits will include the collection of data of customers, their economic and social background, purchasing power, region, profession, and many more. All these data will classify the customers on various parameters to identify the paradigm of purchasing. Based on these inputs, Facelift Limited can employ the strategy of establishing the branches of company. In addition, it will help in identifying the types and features of furniture that customers in the specific region and economic status can buy.
Accordingly, the company can plan to manufacture, supply, and make available the products at the various outlets located in the different regions domestically and internationally.
Therefore, keeping the diversification strategy of the Facelift Limited in future for both domestic and international market, it is advisable to select XYZ Solutions Limited that has the exploratory caliber of influencing and impacting the international market in the future. This strategy will enable Facelift limited to become a global player in the furniture industry, and diversify the business efficiently by using the professional expertise of the XYZ Solutions Limited.
Professional plan for business development of Facelift Limited
The implementation of the Facelift Limited plan is presented at the network diagram:
The network diagram of the of Facelift Limited
The critical path of implementing the plan is presented below (ET stands for expected time, LT stands for lead time that means the needed before the task can be implemented):
In the modern age of information, there is an urgent need to have strategic plan in place for the business development of Facelift Limited. In this process, the professional expertise of the XYZ Solutions Limited will play a key role in diversifying the networks of the company. So, there are many ways to explore and strategize the business markets and customer trends. But, one of ideal ways to revolutionize the markets is:
MMM
Using this network system, it is safe and ideal to channelize the expertise of the XYZ Solutions Limited to identify the market and competitors in the furniture industry. After the analysis of market, the focus should lay on socio-economic and regional patterns of customers. Further, it will be pertinent to improve the timely production and supply system of products domestically and internationally based on the information available for the market and customers. When the company achieves this network and planning, further efforts should be laid on the quality delivery and diversification plan of the product, markets, and process. All these professional approaches will contribute to magnify the growth of the Facelift Limited in the furniture market. But, during the process of growth and strategic planning, there is a need to keep certain questions in mind for ensuring the channelized development of the organization.
Sample questionnaire in decision-making
Prior to taking any investment decisions, “Facelift Limited” managers look into market research. Some of questions that deserve to be answered are:
- What changes in society are likely to affect the product of furniture industry?
- How might new technologies affect our business of furniture?
- What are likely to be the future market trends in domestic and international environment of furniture?
- Where are the opportunities within the market place of the furniture industry?
- What new categories would appeal to the target market of the furniture industry?
- How far do consumers think the brand could elongate into the market for diverse furniture goods?
Conclusion
Based on the aforesaid description, interpretation, and analysis on the whole gamut of decision making, and its role in business in the context of Facelift Limited, it becomes crystal clear that taking an appropriate decision in business plays a vital role in every organization. There should be collaborative discussion and problem diagnosis. It is valuable to listen to others and accept their suggestions. It is not only the leaders and the managers who are the decisive factors of the organization, but it is also every individual is the actual contributor to the success of the organization. Thus everyone has to be involved in decision making. When the managers or leaders take decisions, it may or may not be as effective and valuable as they seem to be. In this context, multiple perspectives play a key role in defining the thought process.
On the other hand, when there is a mutual understanding and discussion with the rest of the members, there is proper channelization of resources and efforts. This measure will pave the way for better understanding between the employee and the leader or manager.
Finally, it results in building the trust and the confidence in the manager or the leader. The leaders should realize that any decision that they make cannot be influential unless it is accepted by the community. The strength of a leader or a manager lies in the unity of their subordinates. It is not the manager that contributes to the best of the organization.
They are only a medium or channel for initiating the goal. The actual goal achievers are the employees. So, decision-making helps us build a system of collaboration and co-operation among different levels of employees for the holistic development of organization. Now, time has come in the modern context to take the lead in learn the nuances of decision-making and make organization fly high with glory of success and achievements.
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