• S. Banik

Understanding techniques used for decision-making

In business, decision-making is the process by which stakeholders or investors select a specific action from a large number of available options in order to generate the desired results for the company. The primary goal of decision-making is to enable the firm to maximise the use of its resources in order to achieve its long-term objectives while simultaneously reducing the gap between the firm's current situation and its desired situation. The process of making decisions revolves around identifying organisational challenges and devising a plan of action to address those challenges effectively. Organizations make decisions based on a variety of factors in order to increase their efficiency and productivity. When making decisions, decision-makers should consider applying appropriate decision-making techniques in a variety of scenarios in order to make better decisions (Mukherjee et al., 2018, p.57).

The SWOT diagram is used by the businesses to assess various aspects of their productivity and viability. In this process, the firm's strengths, weaknesses, opportunities, and threats are thoroughly examined. When analysing the Company, the decision-makers examine the firm's power; this allows them to better understand what differentiates them from their competitors and what they can do better. The company's strengths are comprised of a variety of factors such as product quality, employee commitment, and more effective marketing strategies. The majority of a company's weaknesses are related to activities that the company can improve upon. The Company's weaknesses may have a negative impact on its long-term performance, and when they are identified early, they can assist decision-makers in avoiding losses associated with weakness. As a result, opportunities are linked to the Company's strength; the Company examines its strength in order to identify different options in the market, such as market penetration. In order for a company to achieve its goals, it must overcome the threats that stand in its way.

SWOT analysis assists businesses in identifying the problems that they are facing as a result of their weaknesses and threats, and it also assists decision-makers in resolving those problems as a result of their opportunities and strengths. The technique is useful in determining the viability of a business as well as the potential for diversification strategies to be implemented.

It is a decision-making technique that is used to determine the profitability of an enterprise, analyse the cash flows of an organisation, and determine the payback period for a project. It is critical for a company to use this technique when making investment decisions between multiple ventures in order to determine their viability. In order for a project to be considered financially viable, its cash inflows must be greater than its initial cash outlay. Throughout its economic life, it may have the potential to generate cash flows from operations. Using the discounting of cash inflows and outflows, decision-makers can compare and contrast multiple investment projects. This technique assists decision-makers in analysing the financial statements of the company in order to assess its performance and make recommendations based on the information obtained.

Additional to this, ratio analysis is an important tool for making accounting decisions in a business organisation. The information contained in the financial statement is broken down through the use of ratio analysis, and those breakdowns are essential in making important decisions in the business world. It enables management to delegate critical decisions to those who are best suited to make use of the information in question. Potential investors use financial ratios to determine whether or not to make an investment in a particular company.

This is another technique that decision-makers use to evaluate the available alternatives based on price, fixed cost per unit, and variable cost per unit (or per unit of output). It is a measure of the number of sales that are required to cover all of the company's expenses. This technique is used by decision-makers to determine whether the company's sales will be able to cover its costs in the future. The Company's decision-makers will advise the company to stop producing products that do not generate enough revenue to cover all of their fixed costs. A product's break-even point may or may not be of interest to investors depending on their investment objectives. Nonetheless, they may rely on this analysis when deciding which investments will break even and which investments will not.

As a result, decision-making techniques are critical in the business environment because they play a critical role in ensuring that appropriate measures are taken to promote the interests of all stakeholders in the enterprise. This technique is used by decision-makers to analyse the business environment because it is essential in identifying the strengths and weaknesses of the organisation as well as the opportunities and threats it faces. Financial analysis is used in the Company's investment decisions, and it is used to determine the viability of the projects being considered. The use of ratio analysis is essential in exploring different aspects of financial statements in order to gain a better understanding and make better decisions. Break-even analysis is used to make decisions about which products to manufacture and which ones to drop from production (Zamani-Sabzi, et al., 2016, p.102). To ensure that decisions are made efficiently and effectively in all situations, organisations should implement appropriate decision-making techniques to ensure that decisions are made efficiently and effectively.e are times when the books are thoroughly examined and the management receives a second view on their financial situation.