Every business is all about making decisions on one kind or another. Whether it’s deciding to launch in a fresh market, develop a new service or hire an extra member of staff, executives are making important decisions about their businesses every day. However, making a bad decision or a wrong choice could be catastrophic for the entire company. So how can you ensure that you make better business decisions? In this article we look at some of the tools and techniques that are available to help you do just that.
This is one of the best known decision-making tools. SWOT stands for strengths, weaknesses, opportunities and threats. When used in the context of decision-making, it helps business owners and managers to identify all the internal and external, positive and negative factors affecting a decision. The SWOT analysis can be a very effective tool, however, there is a certain amount of subjectivity involved and so it’s probably best to use it alongside another tool.
PEST is an acronym for political, economic, social and technological and it helps executives to get a handle on external factors that can affect business performance and activities. Analysing external factors in this way, can help to improve decision-making and timing as it involves considering current trends to help predict future ones. The PEST analysis is, however, only concerned with external factors and so could give an eschewed view.
This technique is useful when you want to compare the relative merits of a number of possible courses of action. Under a cost-benefit analysis the benefits of a given situation or business-related action are summed, and then the costs associated with taking that action are subtracted. A cost-benefit analysis is particularly useful when the decision to be made has important financial ramifications and it enables you to come to a decision that makes the most sense financially.
The decision matrix is often used to evaluate all the options before making a decision. First you need to create a table with all the options in the first column and all of the factors that affect the decision in the first row. Managers can then score each option and weigh which factors are of more importance. And a quick tally with a final score will reveal which option is the best.
This method is often used when decision-makers want the input of consumers when making a decision as it helps to determine consumer preferences. It involves presenting consumers with choices and then analysing what were the drivers for those choices. A conjoint analysis can be a useful tool when making decisions about services and products.
Whatever tool or technique you end up using to make your decision, the important thing is to be decisive. Procrastinating over a decision can be damaging and could mean that you end up missing out on an opportunity. At the same time, rushing into a decision isn’t a good idea either. Every decision is potentially an important one so make sure you use the most appropriate technique and have all the information, data and statistical analysis in front of you before making that final choice.