Agriculture Reference
In-Depth Information
people are involved in its various aspects, work for many weeks or months on analysis,
spend a great deal of money, and publish lengthy reports which outline proposed solutions.
Or the process can occur informally over coffee in just a few minutes with no written report
at all. The more important the issue, the more likely the process will be formalized. In any
case, effective decision-making is a systematic process that involves some key elements and
several rather specifi c steps.
Three necessary elements are part of the decision-making process. First, decision-making
is built around facts. The less relevant, factual information there is available, the more
diffi cult the decision-making process. Second, decision-making involves analysis of this
factual information. Analysis may be a highly rigorous statistical treatment using large
computer spreadsheets, or it can be simply a logical thinking process. In either case, deci-
sion-making requires the careful examination of facts. Finally, the decision-making process
requires an element of judgment, a subjective evaluation of the situation based on experience
and common sense. Although it is theoretically possible to be completely mechanical in the
decision-making process, seldom, if ever, are there enough facts available or suffi cient
resources or time to completely analyze the situation. Human judgment is a necessary part
of professional decision-making.
With these three elements in mind, let's look at the steps involved in the decision-making
process:
1.
Problem Identifi cation
: This is often the toughest part of decision-making. It is easy to
confuse symptoms with the real problem. The problem may seem to be low profi ts,
when low profi ts are simply the result of an ineffi cient, high-cost distribution system.
Once the problem is clearly defi ned, it can usually be more easily addressed.
2.
Summary of facts
: This step brings to the surface and highlights information pertinent to
the problem and its solution. It may be critical to note overall company goals, the impact
of the problem on the business, environmental factors limiting possible solutions, or
technical facts that affect the outcome.
3.
Identifying alternatives
: This step identifi es and lists feasible alternative solutions,
exploring various possibilities. Only feasible solutions should be considered.
4.
Analysis
: This step may require rigorous examination, weighing the costs and benefi ts
of each alternative. Analysis considers both short- and long-term company goals.
Although analysis should be objective, the fi nal selection process should include some
subjective evaluation of alternatives.
5.
Action
: One of the most critical steps in the decision-making process involves imple-
menting the chosen alternative. Often this requires careful planning prior to the execu-
tion, but it is a critical step. Management responsibility goes much further than just
deciding; it requires execution and results.
6.
Evaluation
: The fi nal step in this process occurs some period of time after action has
been taken. Management must evaluate whether or not the fi rm is better off by the action
taken. If the situation has improved, no further action is necessary. However, if the
action taken has not caused the desired results, management must go through this
process again and seek new action alternatives.
Decision tools
There are numerous tools for analyzing alternatives and making management decisions, and
the number is growing rapidly. Some of these tools are complex, while others are simple.
