Decision-making process within a business is influenced by multiple factors. These factors are significant for successfully running a business and assessment of their importance is essential. By understanding the most critical elements involved, a business organisation can adequately respond to market requirements and promote its production and services.
According to economist Rob Hyndman, to be successful, every business needs to be familiar with the market environment and this is why research is necessary in order to obtain necessary information. The scholar explains that business organisations need to always pay attention to what is happening in the business world, what are the trends among consumers and what is demanded the most. By assessing the relevant information, businesspeople take adequate steps to respond to specific demand by consumers. For example, after exploring the market, the Taiwanese technology producer HTC incorporated the Android software in its mobile devices. This step boosted the sales of HTC products due to the high popularity of the Android operational system.
Competition is another factor that strongly influences decision making processes within businesses. Since the market nowadays is highly competitive, businesspeople always pay attention to the business operations of their rivals. For example, when Apple released its iPad tablet, Samsung quickly responded by releasing its Galaxy Tab which proves that while taking decisions on future developments, businesses consider competitors and their business development plans.
Economic environment is particularly important because it is related toith the buying capacity of customers and what products the people in general would afford. When taking decisions, business people bear in mind that they must comply with some standard and not, for instance, impose high prices on their production in times of financial recession. For example, Apple produces the iPhone mobile devices which are more expensive than similar devices by other brands. However, when major consumer states like the UK entered into severe financial crisis in the beginning of 2011, the company announced that it is developing a cheaper version of the iPhone that would respond to the economic environment in countries where there are financial problems.
Social responsibility towards customers is also a factor that influences business decision making. Economist Paul Hohnen from the International Institute for Sustainable Development emphasises that its concept is that business must be acting for the common good and in the interest of the general public. For example, UK legislation does not allow banks to impose unreasonably high fees on customers who are late with their mortgage payments. This legislation is followed by leading bankking institutions in the UK such as HSBC and Lloyds TBS.
Cost and Benefit
Financial expert April Dmytrenko highlights that for successful business decision making, it is required that business bodies create cost and benefit analysis. This approach takes into account expenses for the business from the process of production and revenue that would be generated when the production is put on sale. Thus business people are able to determine whether certain products would be a good business opportunity. For example, before releasing the Chevy Volt hybrid car, the business developers in Chevrolet analysed a detailed cost and benefit plan. It determined that the revenue from Volt hybrid sales would justify the expenditures of its production.