Individual Decision-Making Techniques-Decision-Making in Business Context
Decision- making is an important life skill affecting people in all moves of life. Decisions can be either prompt or long-term. The decision-making process seeks to come up with a final decision after evaluating a variety of possible results (Drucker, 2009). Several scholars have suggested several techniques which aid in the process of decision making. These techniques can be categorized into two broad classes depending on the degree of involvement: individual decision making and group decision making (Frederick, 2010). Both techniques can be broken down further into more refined decision-making techniques. This paper, however, seeks to address individual decision-making techniques: A PLAGIARIZED SAMPLE–ORDER YOUR PAPER NOW
The two methods used in this essay are Multi-Criteria Decision Analysis Techniques (MCDA) and Cost Benefit Analysis (CBA) (Frederick, 2010). Both tools are to be applied to the same decision. The possible results will be stated in each case and the final decision outlined. An examination of their effectiveness will be conducted and the respective procedures used in every case to reach the conclusions outlined.
The techniques are grounded on some procedures which should be followed to ensure accurate and reliable results. Cost-benefit analysis involves a systematic estimation of the monetary input and output in a given decision (Drucker, 2009). The pros and cons are represented in terms of financial values. Multiple criteria decision analysis is based on both intuition and evaluation of the successes and risks associated with any of the options (Maryam & Habeeb, 2012). Application of more than one technique in a decision often translates to a more suitable conclusion (Wiley, 2016).
In this case, this essay will take a business dilemma of either to buy fives cars for five employees in the organization or to buy a fourteen seater van for transportation of company employees. The possible results in the scenario mentioned above will determine the final options as the acquisition of a car or purchasing of a van. Assessing the two options using the cost-benefit analysis will require someone to come up with the possible costs and benefits of adopting any of the two options. Applying the multi-criteria decision analysis will entail both the personal insight and the advantages and disadvantages of the two options.
Based on the above analysis, this essay will recommend the use of the MCDA method. This method bases its conclusion on two parameters and hence enhancing its effectiveness (Frederick, 2010). CBA is only founded on a single feature. In addition, CBA is inclined on monetary estimation and hence limits its application to financial dealings at the expense of other disciplines such as history, psychology and linguistics (Wiley, 2016).
The project whose profit will outweigh the cost in the case of CBA will automatically be the one that an individual will go for. If the company management decides to buy five cars, it will need a huge sum of money to acquire luxurious ones. What will the company get in return? Supposedly, it will be primarily for comfort and a higher social status for company managers. There is no monetary output resulting from a car. If the company buys a fourteen seater vehicle, it will not incur as much cost as in buying five cars. After some time, the company will be entitled to a certain monetary gain through savings realized from purchasing the van instead of cars. The long-term result will be a huge profit even more than the expenditure. In conclusion, CBA will prompt a manager in purchasing a van.
MCDA will require a person first to apply his or her immediate cognition and afterwards assess the benefits and difficulties of any given option. At the mention of a car, managers will be excited by the comforts of travelling in a luxurious car; reflect all the pleasantries associated with it. This is not based on any reasoning ability. Later on, the decision maker will have to take into consideration the results of the possible options. Buying a car comes in with some hidden costs such as fueling and service charges. Buying a company van will give more benefit than a car. Similarly, an individual will end up acquiring a van: A PLAGIARIZED SAMPLE–ORDER YOUR PAPER NOW
Both techniques have the same results. This should not always be necessarily the case. Possibly different outcomes can be realized in a similar dilemma. If different results are realized, one should consider other decision-making tools. The more the tools used, the more reliable the decision.
Decision-making is a central process both at the individual level and at the organizational level. The decisions we make not only affect us at the contemporary situations but also later in life. We should, therefore, consider making informed decisions to avoid regrets afterwards. Making decisions with the will of pleasing or finding favor should be avoided. The vitality of informed and excellent decisions is the achievement of the intended goal and the elevation tied to success.
Drucker, P. F. (2009, February 24). Welcome to Decision-Making-Solutions.com. Retrieved February 27, 2017, from http://www.decision-making-solutions.com/decision_making_techniques.html
Frederick, S. (2010). Cognitive Reflection and Decision Making. Journal of Economic Perspectives, 25-26.
Maryam, A., & Habeeb, O. (2012). Theories And Strategies of Good Decision Making. International Journal of Scientific & Technology Research, 50-53.
Wiley, J. (2016). Behavioral Decision Making. Journal of Behavioral Decision Making, 20-24.