In most businesses, a few common factors usually have the greatest influence on the decision-making process. Although personal characteristics, stress, experience or a looming deadline can play a role, objective business decision-making processes work to minimize these influences. Instead, processes should allow decisions to be based on factors that promote growth and profit.
Information Input Channels
The type, source and degree of information gathered by decision-makers influences the quality of business decisions. According to the U.S. Small Business Administration, businesses that rely on multiple input channels typically get better information -- and make better decisions -- than businesses that allow only one source to influence decision-making. For example, relying on information contained in financial statements, research reports and a warehouse storage floor plan provide a more effective base for making inventory decisions than relying on recommendations from a single warehouse supervisor.
Making the best use of limited resources often means decision makers must choose between two or more alternatives. In these types of decisions, an opportunity cost tradeoff is an influencing factor. The tradeoff, which can be tangible or intangible, is what a business gets vs. what it gives up by choosing one alternative over another. For example, for a business on a tight budget, a decision to upgrade the computer network might increase network efficiency. However, it might also upset employees if this decision delays plans to purchase new desktop workstations
Return On Investment
Return on investment is the difference between money you invest in things like marketing campaigns, inventory and real estate, and the potential or actual return. Because ROI calculations are useful in mitigating investment risks, they influence both pre-investment and post-investment business decisions. For example, by dividing potential return by the investment expense for a direct mail marketing campaign, a business is better able to decide whether the potential return justifies the expenses and risks involved in creating and implementing the campaign.
Image and Brand Management
Brand and image considerations influence decisions that focus on public perceptions and on intangible gains. For example, concerns about public perceptions can influence decisions about product ingredients, energy conservation policies and procedures, sponsorships and public relations campaigns. Brand awareness, which focuses on differentiating the business from competitors and on building customer loyalty, influences decisions about pricing, marketing and displaying products and services. For instance, just as brand awareness goals for a discount store are different from those of a high-end retail business, so are the pricing and marketing decisions each business makes.
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