Managers are responsible for making decisions that influence the success and direction of an organization.
Thank you for reading this post, don't forget to subscribe!Decision making involves selecting the best course of action from available alternatives, and business analytics plays a vital role in ensuring that these decisions are informed by reliable data rather than solely by intuition.
The decision-making process generally consists of the following steps:
- Identify the Problem – The first step is to recognize and clearly define the problem or opportunity that requires attention. For example, noticing a decline in product sales.
- Gather Information – Relevant data is collected from both internal and external sources to understand the situation fully. This may include customer feedback, market research, and financial reports.
- Generate Alternatives – Managers brainstorm and list possible solutions to address the problem.
- Evaluate Alternatives – Each potential solution is assessed based on feasibility, cost, risks, and expected outcomes. Analytical tools and data models are often used in this stage.
- Select the Best Option – The most effective and efficient solution is chosen after a careful comparison of alternatives.
- Implement the Decision – The chosen solution is put into action through a structured plan.
- Monitor and Review – Managers track the results of the decision to ensure it is producing the desired outcomes, and make adjustments if necessary.
There are three main types of decisions that managers make:
- Structured Decisions – These are routine and repetitive decisions that have a well-defined procedure for solving them. An example is processing payroll or reordering stock when inventory reaches a certain level.
- Semi-Structured Decisions – These involve both standard procedures and managerial judgment. For example, deciding on a marketing campaign involves analyzing data but also requires creativity.
- Unstructured Decisions – These are complex decisions that require significant judgment, creativity, and intuition because they lack a predefined process. Entering a new international market is an example.
Business analytics supports decision-making by providing factual evidence, improving the speed and accuracy of decisions, reducing uncertainty through predictive insights, and enabling continuous performance monitoring and trend analysis. By relying on data, managers can make more objective and transparent decisions that align with the organization’s goals.