Abstract
M.Com. (Business Management)
The business environment requires more emphasis on decision making as a result of ever increasing competition. The decision making process must therefore be speeded up in order to make companies more competitive. This places more pressure on decision makers and allows for fewer mistakes. Decisions on executive level are made by the executive committee. Executives concentrate inevitably more on those decisions that have a major impact on the company and their decision-making ability has obvious implications for the success of the organisation. It is vital that decisions are taken effectively with clearly defined elements through a distinct order of steps.
The decision-making process starts with the observation of the business environment and the subsequent formation of opinions of .various situations found therein. Needs and opportunities are identified by being constantly aware of activities in this environment. The identification of needs and opportunities should be a conscious and continuous process for management. The next step in the decision-making process is the setting of specific goals to be achieved by the decision. Goals are set to establish what must be achieved by such a decision. Certain goals must be met and others are set in order to evaluate different altematives. Different goals, which could range from primary to operational goals. should therefore be set and it is important that goals for a particular decision are supportive of the primary company goals. Goals are valuable as a standard against which alternatives can be evaluated. The development of different alternatives from which a choice has to be made enhances the quest for an optimal solution to a need or opportunity. The decision-making process must be a logical and orderly process in order to enable the decision maker to make an optimal decision. De Bono's (1985) "Six Thinking Hats" provides a logical method of decision-making by a group. By practicing the "Six Thinking Hats" principle a group of decision makers can
develop alternatives to come to a decision in a systematic way without the normal customary conflict inherent in group decision making. The choice between the different alternatives is the last step in the decision-making process. The decision makers must compare the different alternatives with predetermined standards to be able to establish the optimal choice. These standards include historical, external and optimal standards as well as the maintenance of the status quo. The final decision is made according to the degree that the alternative complies with the decision goals and to the degree of confidence that the decision-making team have in the forecast of the possible consequences of the alternative. Decisions on executive level are mostly concerned with the future and as such fairly uncertain. As a result of the ever increasing competition in the business environment and largely due to the rapid development of technology, the need for aids in decision-making is becoming more of a necessity with less room for mistakes. Forecasting is a decision-making aid that can be used by management in all the functional departments of the business. It is, however, important that there is communication between departments to ensure that the appropriate information is used in forecasting models. The choice of the appropriate forecasting
technique depends on the characteristics of the forecasting situation and the
characteristics of the forecasting technique. The forecasting technique is chosen
according to the circumstances and the requirements of the particular situation
that requires forecasting. The decisions that executives make are subject to both uncertainty as well as risk. The risks that are known to the decision makers can be quantified by adding probabilities to particular alternatives. The degree of risk that the executives are prepared to take depends on their attitude towards risk.