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Decision making is the most crucial and important part for any business house. At every level of business, decision making is equally important. The board of directors take decision on the top level that is strategic decision of business for investment and future growth. At the middle level, decisions are made by managers these are tactical decision regarding how they can increase the contribution of their department in overall business objective. The operational level of business decision is made by the employees themselves how to do their own work most effectively (Bowett, nd).
FIGURE: LEVEL OF DECISION-MAKING
Source : Tutor4u
1. What are the main issues for any business when starting out and attempting to grow and become profitable and are important factors in being successful in business decision making and planning?
When it comes to starting a business, there are lots of issues which have to be considered. And among them first thing which need to be worked out is what legal structure does the business going to take, whether to be a sole trade, partnership, limited liability partnership or limited company. The structure selected will affect number of things, like
The tax and national insurance to be paid.
The record and account to be kept.
The ways management decision to be made etc. (businesslink).
Funding is very important for every type of business. It is very essential to have an appropriate estimate of funds required and their sources. So that there should always be a sufficient fund available for the smooth working of business. Properly managed funds act as the biggest pillar for any growing business.
Through a constant research in the industry a business house can identify the weakness and strength of the competitors. Competition is a very healthy thing, and regular research and update information of market makes business run swiftly.
It is very important for a growing business to make sure that there is enough market available for its produced goods because without enough market no business can grow.
Beside these there are other issue related to the growing business organization such as business plan, staff, seeking professional advices, government issues, environmental and social issues etc. (bytestart)
Factor affecting decision making process
External environment aspects
Individuality of the decision maker
Participation, acceptance and execution
Experience of a decision maker
Power to decide
Escalation of commitment (point of no-return) (businessihub)
2. How do the functional areas of businesses i.e. Marketing, Finance, Human Resources and Operations relate to one another in the decision making and planning of a business?
In every individual business, there are many key tasks which have to be performed daily. In small business these tasks are performed by two or three people but in a large organization specialized help is needed like buyers to purchase stocks etc.
Functional area in business
In a big business organizations, distinct functional area could be found easily because people are required to work in departments and each department carry out specific responsibilities which is linked to particular area. Some of the common functional areas are production, research and development, administration, customer services, distribution, finance, human resource, information communication technology, marketing, sales etc. these function can be seen in the given figure.
Figure : Functional areas in business organization
Source : BTEC First Business
Functional relation among different areas of business
It is essential for all the functional area of the business to be co related with each other this keeps business on the track. Some of the key issues which need to be related and communicated for the precise decision making and planning in the business are shown below in a table (BTEC FIRST BUSINESS 2nd edition).
Figure : Relation Between Different Functional Areas of Business
Source : BTEC First Business
In large business organization, every zone needs data and collaboration from each other so as to function efficiently. Constant communication and teamwork is needed for any growing business to achieve its objectives. This shows that there are always joint decisions are taken by managers of different branches in sake of everyone's needs. This collaboration among different functional areas of business gives success to growing business.
3. What information would you need to plan a successful business, where would it come from, and why is it important?
Looking ahead with specific and organised way with a process of allocation of resources, concentrating on crucial points of business and formulate methods for problem and chances and other pre decided plan are business plan. Awkwardly, people think that business plan is for new business or for business loans. But they are also vital for running a business at every time and situation, whether or not the business needs new loans but businesses need plans to enhance growth and expansion according to urgencies (Berry,nd).
Business plan defines the scheme that is created to exploit a concept. It has conventionally three chief functions:
Sales tools (Lawrence and Moyes).
Information Needed to Plan a Successful Business and there source
To plan a successful business it is important to collect the relevant data from different sources through different methods of research. Method could be used like SWOT analysis and PEST analysis which will give significant information needed to plan a successful business.
Some important information needed is
• Funding Requirements
• Funding Strategies
• Sources and Uses of Funds Statement
2. Market and Industry Analysis
• Market Size and Growth
• Target Market
• Industry Structure
• Competitive Environment
3. Product and Service
• Proprietary Rights
• Stage of Development
4. Competitors and their polices
5. Risk assessment
Etc. information can be collected with the help of proper analytical research which further
become the mile stone for the growing business (Massy).