Decision-making is a daily activity which every human being has to face. People take right or wrong decisions based on their experience and methodology used for it. Similarly, business organisations take decisions many of which will have an impact not only on internal stakeholders but also on external stakeholders. Hence, business leaders are compelled to take into account almost every area which might be affected by taking the particular decision. In doing business, due to the highly volatile and unpredictable business environment, the probability of taking wrong decisions or decisions which will not deliver expected results, is also on the rise. 

To make complex decisions, one has to be well experienced and qualified. That is why people in decision-making positions of the organisation are paid more than other employees. However, taking wrong decisions can be costly and might turn an organisation into a loss-making organisation. Consequently, different approaches have to be followed for dealing with various matters. As decisions can have an impact on a large group of stakeholders, decision-makers must look at it in different perspectives, especially in the eyes of beneficiaries of that particular decision. The way in which stakeholders respond to the decision can judge whether the decision is right or not. Hence, there are seven areas that need to be taken into consideration, before decisions are made. 


Opportunities
It is needless to say that people take decisions to achieve positive results. Business leaders should be able to evaluate what kind of opportunities can be opened by making this decision and how far it is helpful to take the organisation forward and so forth. For an instance, if it is up to you to decide on a new product launch, your expected opportunities might be the level of being able to increase market share, build consumer trust and loyalty and to sell a higher number of units, etc., if this evaluation on opportunities gives you a green light, you don’t hesitate to be optimistic about the decision. If you are going to decide on expanding the branch network, you consider the opportunities. Furthermore, if one decision gives you more opportunities than the other decisions do, you will choose it, as it inevitably makes your company profitable and competitive. This is an area where positive outcomes of the decision to be taken are looked into. 


Risks 
Risk has always been with business decisions, as business people take decisions on things which are really out of their control. Here, risks involved with particular decision have to be looked into. Negative consequences of the decision ought to be identified, so that possible problems can be avoided. Moreover, getting an idea of how likely they are to come about is so important that it makes managers prepared to find some early strategies for managing risk. Managers are able to decide whether it is accepted or not, after careful evaluation of risks. For an instance, once you are going to invest a large amount of money, it is up to you to consider the risks pertaining to different options. Then, you will find that some options are riskier than others. Simply, putting money into the share market is riskier than investing it in bonds. Thus, the responsibility lies on your hand to manage the risks related with the decision or to reject the decision and look for another.


Alternatives and improvements
Now, you have identified pros and cons connected with the decisions which you are going to make. You should be able to improve opportunities and minimize the risks by finding alternatives. On the one hand, when an option is at risk, there might be many more alternatives which give you the same number of opportunities and are less risky. On the other hand, you are able to create a higher number of opportunities by having a positive impact on some areas related to the relevant option. Furthermore, once sales of a product have fallen sharply, the risk is that your sales profit also can be on the decrease.

Nevertheless, you can improve the sales of that product and manage the risks by adding some values to the product, so that consumers will frequently buy the product at higher prices. Value addition to the product can be attractive packaging, improving taste and quality and efficient service after sale and so forth. However, there are some cases where these methods of value addition might be very costly. Then, you will find some alternatives instead of improving it. If the same example is further described, you stop producing the product and will consider to launch a new product meeting consumer aspirations. Accordingly, it is up to managers to choose either finding alternatives or improvements which are more suitable for the case. 


Past experience
Your decisions can be nurtured by past experience. You must be able to identify whether anybody has done something like this before. If so, failure or success of that decision paves the way for you to carefully consider the facts that will result in either success or failure. There might be a lot of people whose experience can be made an essential ingredient for successful decision-making. We can learn more by analysing where those people were wrong, so that we can avoid those points. However, there might be some disadvantages of learning from past experience, as the decision-making environment has considerably changed. Moreover, decisions taken on the market in the past can never be applied in the same way in today’s market. Political, economic and social environments that had an impact on decision-making in the past have evolved. That is why it has been difficult to make decisions in a volatile environment. However, past experience can be used to avoid unnecessary failures. 


Analysis 
If available, you are able to analyse data, so that a logical foundation can be laid for rational decision-making. Information gathered from different sources ought to be logically analysed, so that trends and fluctuations can easily be found out. In this analysis, if we see some positive trends, we can strategize to further make it work out. Solely being dependent on data analysis might also be risky. For example, once we analyse data collected from a marketing research, even if we might expect trends to happen in the future as well, it may not do so. Consequently, it can be said that the risk has always been attached to data analysis. When financial decisions are made, IRR and NPV have to be calculated. What is more important to be penned here is that sources whereby data are collected must be accurate and appropriate. In other words, qualitative data will undoubtedly result in correct decisions. 


People 
People take decisions and are affected by decisions. It means that decision-making should be a collective process. Hence, what stakeholders think of the decision must be taken into account before finalizing it. Different people have different points of view the diversity of which nurtures the process. How other people think of it could be the outcomes of the decision, after it is put into practice. Any decision taken without consulting from relevant stakeholders will be futile. Stakeholders are employees, shareholders, customers and government whose contribution to make decisions implement is of the immense importance. The level of consulting them can vary from person to person. 

There is no argument that everyone involved in making decisions should be consulted. Nevertheless, a question has to be raised whether everyone is capable of equally or appropriately contributing towards that decision. If not, their knowledge and skills should be improved. For example, if you decide to increase your sales, your sales team has to be empowered with necessary skills. Hence, people are an essential part of decision-making. 


Alignment and ethics
What you decide should be matched with your organisation’s values and strategies. What is different from company’s core values might not be supported by other stakeholders and most probably can be refused by the senior management. Furthermore, decisions should go with organisational culture, as decision-making and its implementation are energized by the culture. They must be ethical. If a company decides to be involved with insider trading, it is unethical and illegal. An employee, who sees unethical business decisions, might decide to leave the company. When unethical decisions are put into action, customers also might negatively respond. It can be seen that being unethical will open a can of worms. Hence, every decision should be double-checked, so that they will align with the big picture. 

Even though decision-making seems to be easy, making decisions in a volatile environment is really difficult. That is why the emphasis has to be given to the above-mentioned factors which lay a solid foundation for making rational decisions in a volatile business environment. 

 (Amila Muthukutti holds a Bachelor’s Degree in Economics from the University of Colombo and can be reached at [email protected])