What is Decision Making?

Definition: Decision making is the process of formulating resolutions within the scope of influence. When analyzing problems or situations, decision making is the process that a person or a group does to evaluate solutions and alternatives to choose the most rational option.

What Does Decision Making Mean?

In business, decision making occurs frequently in almost every area of a company, particularly at managerial positions. Organizations must encourage not only appropriate decisions but also efficient processes to make resolutions. Excessive delays and complexity in decision making minimize the company’s ability to react timely to negative events but also to take advantage of new opportunities.

Companies have to guarantee that the person or the group making the decisions has the required information to analyze the feasible alternatives and forecast the possible outcomes. The process also has to involve the most fit individuals in terms of competences, knowledge and authority. However, participation of too many people would difficult and slow down the process.

Example

Marline is a fashion brand marketed by a U.S. company. The brand targets young working women living in main cities. It offers a delicate balance between risky trends and styles accepted at most offices. Competition is strong since there are many brands in the market. Innovation is a key success factor and the company has the goal of delivering each item to stores one month after its design is ready.

To reach that challenging goal, every week there is a meeting that holds 12 people from creative, marketing, financial and production departments. They have to decide about four or five new designs and their related fabrics, costs, prices and marketing campaigns. They also have to decide which products to take out from stores. People involved in the process are not only capable but also have the authority to decide and later implement the decisions taken by the group. All persons come to the meeting with valuable proposals. Market trends, competition moves, sales and financial results are available and analyzed by all departments before the meeting.

When conflicts arise due to opposite point of views, the General Manager intervenes to achieve rapid agreements. Thanks to a rapid but effective decision making process, Marline is able to success in a complex, changing market.