Decision Making for an International Business Essay Example

This essay focuses and explores three factors in the decision-making the process that may influence the interpretation and understanding of information. This factors have a great impact on success, creativity, growth, and effectiveness, and accomplishing the current organization`s goal. Decision making is a sensible and human process concerning both individual and social spectacle based upon actual and value premises that settle with a common choice of behavioral action among one or more alternatives with an aim of moving towards the desired state of affairs. In addition, it is considered as a problem-solving activity that yields a solution assumed to be optimal, or at least fitting.

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Decision making is a critical aspect to feeling successful and happy in life; decision making is at the root of all we do. It is vital to develop key operative decision making, abilities, and strategies. Proper problem-solving strategies include, however, are not restricted to brainstorming, written remediation plans, cost-benefit analysis, and an examination of possible choices (Wester 2008). The decision-making process can be complicated and be made overwhelming. As an outcome, it is valuable for business people to learn an ideal to follow, that may be applied today to day decisions, as well as life-changing choices.

Krantz (2007) postulated that a goal and plan based decision-making model, is an operative and sound approach to present in decision making; in this type of model, the business person is encouraged to focus on setting goals, not usefulness or happiness. According to Krantz, plans are designed to encounter one or more goals. That is to say, people make plans to automatically or consciously meet the goals they have already set, and some plans satisfy several goals. For example, individuals who attend any sporting event with a colleague may be satisfying several goals; camaraderie and friendship, emotional inspiration from a competitive sport, and possibly use social knowledge added through watching the game.

In this type of model, goals are set dependent and plans are based on their capability to meet the goals. Basically, in the goal or plan based model, the context provides that background for the decision that requires to be made; influenced by the context, goals, and resources, contribute to the growth of acceptable plans; whereas the decision-making rules are implemented and influence the plan that is eventually chosen. Krantz applies this theory in an insurance business, however, imply the theory may be appropriately applied to a variety of contexts.

Different theories have been generated to elaborate and explore how people make decisions and different factors influencing decision making in the present and future in a business organization. A number of factors in decision making that influence the interpretation and understanding of information include Past experiences, individual differences, including socioeconomic and age, and a variety of cognitive biases and the belief in personal relevance. These elements all have a significant effect on the decision-making process and also the decisions made in a business organization.

To start with, Past experience as pointed previously, has a huge impact on future decision making. Garling, Karlsson, and Juliusson (2005) pointed out that most of the decisions that business people make are dependent on their previous or past decisions that one has ever made. It positions to argue that if something positive outcomes from a decision, individuals will tend to rely on those past decisions, in order to decide a similar situation. Conversely, people tend to evade recapping previous mistakes. This is significant to some extent since decisions which are made in the future about a certain business based on the previous decisions are always not the best decisions. When dealing with some crucial aspects, for instance, making financial decisions, very successful people do not base on past outcomes in order to make an investment decision. In addition, they examine choices regardless of past experiences. Takao Sasaki from the University of Arizona State, took time to centrally explore how individuals weigh several attributes during a decision making.

For example, if an individual had to choose between two identical cars, except that they vary in price. It would be a simple decision to make. Nevertheless, rarely in real life situation that we find yourself in the lucky position to be presented with such problems. It`s more likely that one would have to make such a decision between the cheapest car looking like this. In addition, this would be an appealing easy decision to make. In a real sense, there will be a variety of attributes of the two cars that an individual is choosing between, and he/she will have to decide the ones to prioritize. Moreover, how someone ranks things is mostly dependent on what he/she experiences.

In shaping the outcomes of a decision making, a business person can explore previous strengths and weaknesses occurred as a result of the past decisions. Through reviewing the past business and life experiences, an individual should at least be in a position to have some organization skills gained through the experiences.

In addition, these skills will enable the individual to assign different roles in an organization. In other words, an individual should keep track of the outcomes brought about by the previous decisions. Moreover, a business person should take caution to avoid repeating poor decisions made in the past. Though the structures and the trends in a business framework are changing with time, decision making is also changing and complicated, hence some previous decisions may be of irrelevance.

Secondly, there are numerous cognitive biases that influence decision making. Cognitive biases involve thinking arrays based on generalizations and observations that may result in inaccurate judgments, memory errors and faulty logic. Cognitive biases may comprise, but are not partial to the over-dependence on previous knowledge in order to arrive at some decisions, belief bias; omission bias, generally, people have a propensity to neglect information alleged to be risky; perception bias, this is where people have a tendency to readily describe an event as inevitable, when it has happened; and confirmation bias, in which people observe what they expect in observations.

In decision making, cognitive biases influence business people by triggering them to depend on or offer more credibility to the previous knowledge and the expected observations, while discharging information or observations that are alleged as uncertain, without considering the greater picture. Even though this influence may bring about poor decision making sometimes, the cognitive biases assist individuals to make effectual decisions with the help of heuristics.

In addition to cognitive biases and past experiences, decision making may be influenced by the growth of commitment and dashed results, which have unrecoverable costs (Garling, 2005). Determined people mostly make decisions based on an unreasonable escalation of obligation, that is, business individuals invest much money, extra amounts of time and the effort into a decision that they feel more committed to; In addition, people will have a tendency to continue making risky decisions after they feel responsible for the ruined temple, costs, money and effort consumed on a project. As a result, decision making may at times be influenced by 'how far away in the shack' the business person feels he or she is.

Cognitive biases are of essential relevance in shaping the results of a decision making, since the business revolves around complex frameworks to be captured, hence it requires an individual with efficient reasoning to make these judgments. Bias minded person will not be in a better position to counter these decisions, therefore errors in reasoning and planning will result in poor decision making.

The individual differences among individuals in a business organization is yet another most crucial factor in influencing how information is interpreted and understood during decision making. It cuts across the socioeconomic status and the age of the individuals in an organization, as proved by several researchers. They made an establishment on significant variances in decision making across age, meaning. as cognitive functions as an outcome of age, decision making performance may decline as well. In addition, older people may be more overconfident regarding their ability to make decisions, which inhibits their ability to apply strategies. To end with, in this factor, with respect to age, there is evidence to support the notion that older adults prefer fewer choices than younger adults.

Age is only one individual difference that influences decision making in a business organization. According to some research, individuals in the in lower Supplementary Educational Services (SES) groups may have little access to education and resources, that may make them more vulnerable to experiencing destructive life events, frequently beyond the individual`s control; as an outcome, lower Supplementary Educational Services individuals may make poorer decisions, based on earlier decisions.

Another extension of individual difference as a factor that influences decision making is the belief in personal relevance. When individuals believe what they decide matters, they are more likely to make a decision. Acevedo (2004) surveyed individuals' voting patterns and concluded that people will vote more readily when they believe their opinion is indicative of the attitudes of the general population, as well as when they have a regard for their own importance in the outcomes. People vote when they believe their vote counts. Acevedo pointed out this voting phenomenon is ironic; when more people vote, the individual votes countless, in electoral

Individual differences play a vital in shaping decision making in a business organization. It is likely that an older person possesses a higher range of experience throughout the years as compared to a younger person. This experience is essential and vital in making the key decisions in an organization, since previous decisions can be revised to be better and of relevance.

Conclusion

In conclusion, we have discovered that decision making cut across every aspect of life and to be specific, in a business organization. These factors that influence decision making, as discussed above, play a vital role. Therefore, successful businesses are as a result of core decisions, created and implemented in a rational manner. Decision making is an important area of research in cognitive psychology. Understanding the process by which individuals make decisions is important in understanding the decisions they make.

There are several factors that influence decision making. Those factors are past experiences, cognitive biases, age and individual differences, belief in personal relevance, and an escalation of commitment. Heuristics are mental short cuts that take some of the cognitive load of decision makers. There are many kinds of heuristics, but three are important and commonly used: representative, availability, and anchoring-and-adjustment. After an individual makes a decision, there are several differing outcomes, including regret and satisfaction. Decisions that are reversible are more desired and people are willing to pay a premium for the ability to reverse decisions; though reversibility may not lead to positive or satisfactory outcomes. Cognitive psychologists have developed many decision-making models, which explain the process by which people effectively make decisions. One innovative model is based on goals and planning. There is yet a lot of research to be co...