The Effect On Decision Making Processes


In today's contemporary world, businesses are highly interdependent on each other and hardly ever the decisions are taken in isolation. Effective decision making abilities are crucial for the management of any business. Making decisions is an everyday part of a business. From a low-level supervisor to the board of directors, everyone takes several decisions throughout a day. Every decision which is made today has a certain impact on future decisions, and thus, it is of great necessity that a manager should approach these carefully. They are the ones who have to act as the captain and are responsible for steering the "ship" to its destination. These decisions can be strategic kind decisions (about investment & direction for future growth), tactical decisions (how department may add most effectively the overall business objectives) or operational decisions (conduct of the tasks, responses to the customers and improvements to business practice) taken by the owners, managers and supervisors respectively.

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But the main hurdle remains - how to make a good quality decision. There are no standards which are set to define if a decision is a good or bad. And it is only after the outcome, can the decision be really evaluated and acted upon, if required. But, it is possible for the management to make effective decisions which are highly likely to be beneficial to the business. A number of factors that may affect the decision making abilities include:

1. Prior training of managers in decision-making skills.

2. Good information in the sequence.

3. Management skills in analyzing of the information and of handling its shortcomings.

4. Experience & natural ability in decision-making.

5. Risk & attitudes towards the risk.

6. Human factors like as emotional responses, rivalries, biasness, and beliefs etc.

Since a climate of criticism and apprehension suppresses risk appetite and creativity, managers might respond in a way which ebbs the business' growth and effectiveness. Hence, providing a work environment where they won't be disapproved of for making wrong decisions and are likely to obtain appropriate support from their colleagues & superiors might help them to develop as a decision maker.

Fig 1: Decision Making Process

From the above diagram, it can be observed the predecessors of making an effective decision are the collection and analysis of information and ideas. It is only after optimal information that any management can pursue the best possible course of action. After identifying the objectives, collecting information might be a daunting task which lies ahead in the path of success of the decision taken, but once the information is collected and weighed, it is time to make that decision without looking back.

One of the best methods of collecting information is carrying out research. When research is carried out explicitly for the purpose of running businesses, it is termed as "business research". Business research, which is also commonly known as market research, is a process by which business relevant information is collected so as to ensure that the business operations are run intelligently. With the help of business research, existing businesses are able to keep in touch with the ever-changing consumer demands and expectations and adapt accordingly. Typically, business research is aimed at gaining information that is likely to make the business more successful. While running a business, there may arise some situations which may seem difficult and management face problems as to find a solution to them. In such cases, business research can be used to making confident decisions. Business research can help the management to answer questions regarding issues varying from understanding industry trends, determining which products or services to be offered and deliver to the market, or to better understand the ways to meet the demands of target customer segment and satisfy them so as the ensure brand loyalty. In one way or the other, business research ensures that an informed decision is made so that it can be fruitful.

Business Research: Steps in Decision Making

Fig 2: Business Research & Decision-Making

Assess Current Business: The current business environment of the company provides the platform the development and growth of the company. So it is of great importance to assess the current business situation. There might be some problems in the existing business model that have been overlooked till now, but need to be addressed in order to grow. Identifying the problem at the right time and finding a solution to the same quickly and efficiently might give an advantage by improving the bottom line.

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Create Research Methods: On the basis of the problems that evolve as a result of assessing the current business situation, research methods will be chosen. These research methods could include collection of demographic data about the target market of the new product or service intended to be sold, or to conduct consumer surveys, filling up of questionnaires or through focus groups and ask for reviews on sample products which could be either given away freely with other products.

Determine an Action Plan: Having collected information about the possible courses of actions that can be taken, the management should focus on creating a plan that will effectively execute the change. This plan should be made keeping in mind the long term as well as the short term plans of the organization.

The key to responsive decisions is in connecting with the available information by capturing business events which are happening across the worlds and are related to your business, as well as by constantly researching the market about the scope for growth and the possible courses of action.

Business Research: Benefits & Methods

Business research can be taken up in various methods mainly depending upon the type of the information that is required. However, other factors that also play an important role in the research method to be chosen include the size of the company, the budget allocated, the time constraints etc. Business research is primarily focused on performing market research activities. By doing so, businesses are successfully able to define an optimal marketing mix for their products or services. They can identify potential markets, their needs and wants, what measures can be taken to meet those needs and wants, their distribution channels and ways of making the products and services most accessible to customers and clients. With the help of research, they can identify the potential competitor threats, what the competitors are doing and what benefit the competitors may reap as a result of that. It also helps them to predict the possible best price for their product or service based on the market conditions, situations and the competitor pricing.

Business research focusing on the customer may involve finding out about the customers' feelings and experiences after using a product or service. The methods that can be used for the purpose include questionnaires, interviews or seminars, etc. Researching public data can provide financial statistics as well as educational information in regards to customer demographics and product usage.

One of the most significant trends in the current business scenario, across all industries, is mergers and acquisition. Mergers and acquisition decisions are very sensitive ones as one step taken in the wrong direction can not only result in huge financial losses but also affect the company's goodwill. It is only with the aid of business research, an organization can decide which company to merge with based on their vision and mission, how to value them, and do they have the necessary resources available to garner some benefits from the merger.

Business Research helps businesses to understand the possible opportunities and threats that lay ahead. Opportunities help your organization to grow & prosper, & threats endanger your position. Using business researches can a business not only find possibly opportunities but also assess them and choose the most viable option.

Research can also be used for making decisions which have a financial dependability as to judge if the chosen action would be cost beneficial or not. A cost benefit analysis can be made on the basis of data collected from business research and an informed decision can thus be made.

As discussed above, business research answers a lot of questions about businesses and helps a great deal in making decisions. The two most important types of data that help in the information collection process, and thereby the decision making process, are the primary data and the secondary data. Primary data is the data which is collected specifically for the problem at hand, while secondary data is the data that is collected from researches done by other individuals, groups or institutions, including government agencies, trade associations or even other businesses, for generic purposes.

Primary data, if on one hand, is important because it is unmodified information and is most relevant to the research, then on the other hand, secondary Data is important information that can show a clearer picture of the roads that lay ahead and to foresee the possible outcomes of any action taken. It also paves the pathway for conducting research for the collection of primary data.

Business Research, Decision Making and Information Technology

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As discussed earlier, collection of relevant information is only the beginning of considering the role of research in efficient decision making. After collecting the information, it is also necessary that the collected information should also be properly analyzed, and so, undoubtedly, Information Technology (IT) comes into the picture. Since 1970s, use of Decision Support Systems (DSS) has been greatly acknowledged by various businesses, traders, organizations as well as academicians. DSSs are knowledge based systems which help the businesses by making decisions in terms of management (both financial and strategy formulation decisions), operations, and planning levels. They help the management in keeping pace with the changing needs and wants of the customers.

DSSs are deployed by businesses in order to provide recent, relevant, and complete information in an easily understandable manner. They are interactive systems which aid in analyzing data, extract usable and deployable information. This raw data, as mentioned earlier could come from either primary research or secondary data available from multiple resources. DSSs also make use of company documents, company policies, strategies, and business models to aid decision making. DSSs have a number of benefits including:

They help in improving personal effectiveness.

They aid quick & informed decision making.

They support decisions by finding evidences of benefits reaped.

They help the business growth by ensuring better organizational control.

They drive the thirst for information in the decision maker, focusing on the learning or training of the individual.

They help to optimize the problem solving approach in an organization by revealing multiple pathways to the solution of the problem.

They also provide opportunities for improved interpersonal communication.

They help to create a competitive advantage.

DSSs also help in automation of managerial processes.

Recently, the information environment that surrounds today's business activities and decisions is getting ever more complex. This is mainly due to the fact that with the advancements in IT, the relevant information available to the business management is growing exponentially by leaps and bounds. With ever increasing number of information releasing sources and constantly multiplying technologies, it is no surprise to see the huge importance of IT in aiding business research and hence, decision making process by properly accessing and handling data & information. IT helps by extracting and ensuring relevant information flows to the concerned individuals and simultaneously providing reliable and flexible support. Also, during the process of decision making in order to solve an existing problem, it is also possible to extract valuable information about the market, the business, the competitor etc for possible future situations, such as competitor threats, or product demand and supply. Hence it helps in generating new knowledge & experience for the participants involved, and in the case of right decision increasing confidence in the future actions.


In conclusion, it would be not unreasonable to say that thorough business research is very crucial in the process of effective decision making. By providing ample information, both in terms of opportunities that lay ahead as well as the potential threats that exist in the market, research ensures that proper mitigation measures are taken beforehand, thereby, ensuring minimal investments, and simultaneously, it helps in the risk management process of the business.

By following the steps of a decision making process, a business can effectively gather relevant information and take a decision based on that. The choice of right researching method is also important in successfully carrying out a research. Collecting the right data, analyzing it for deployable information and then choosing a course of action on the basis of that information helps in effective growth of business and paves the pathway for the future of the company.

Also, undoubtedly, IT plays an important role throughout the basic processes of an organization and thus, decision making is also not untouched. DSSs have been recognized by many businesses across the world and they continue to aid decision making.