Influences in Decision Making

What influences help in making decisions for a business

What are some of the factors affecting decision making in business?

Factors include:

• Levels of risk and uncertainty

• Reward for managers

• Opportunity costs(choosing an alternative)

• Business missions, business objectives

• Ethics

• External environments

• Availability of resources.

What is meant by levels of risk and uncertainty in decision making?

All decisions carry an element of risk, with some decisions having a higher risk level than others

What must managers consider regarding the reward when making decisions?

Managers should consider the level of reward likely to be achieved and whether it justifies the risk being taken

Define opportunity costs in the context of decision making.

Choosing the next best alternative when another has been chosen

Why is it important for decisions to align with business missions?

Decisions must support the overall mission of the business

How do business objectives influence decision making?

Decisions should support the business’s objectives

• such as prioritizing customer retention over attracting new customers, to be in the business’s best interest.

How does a business's ethical position affect its decisions?

Decisions must comply with the business's ethical stance

• especially if it acts as a unique selling point; abandoning this can harm the business's reputation.

What external factors must be considered in decision making?

External factors include political, environmental, social, technological, legal, ethical issues, and competition

• which can significantly affect decision outcomes.

What role do resources play in decision making?

A business must consider the availability of its resources

• insufficient funds or staffing can lead to unsuccessful decisions or campaigns.