12 Importance of Decision Making in Business Management

Decision making is an important function of the management since it is spread over to all management activities and is required in every sphere of the organization.

importance of decision making in management
importance of decision making

Even basic functions of Management cannot be performed without decision making. So, the foundation of continuously making selections is the life of a manager.

Truly speaking the tree of functions of a manager stands on the land of decision making.

Since the manager cannot do anything without decision making.

Importance of Decision Making in Management

Briefly, the importance of decision making may be understood, by the following points:

1. Selection and Continuous Operation of Business

Various important decisions are required to be taken before starting any business.

There are so many businesses in the world, out of them, which business should be undertaken and why, from where to arrange finances and in what volume and where from the seek technical advice? All these are important questions, which need sound decisions.

The decisions are required, when alternatives and resources for any work undertaken in scarcity.

That alternative is the best from which most profitable outcomes may be derived, by using the least resources.

Hence, decision making is the indicator of the advancement and life of the business. Nondecisive position may put it to a sad end.

2. Helpful in Determination of Objectives and Achieving Them

The basic objective to establish and operate any institution is to achieve specific objectives and goals.

These act as the guiding factors for all activities of that institution.

Determination of objectives in itself is a high-level decision making.

Future activities and modalities of functioning decided, in accordance with the objectives, so that these may be achieved.

Hence, the decision making regarding the determination of the objectives for the Institution, and also for achieving them has been accepted as the ‘backbone’.

Related: 8 Major Steps of the Decision Making Process in Business (With Examples).

3. Maximum and Best Use of Available Resources

The best and maximum use of physical and human resources of production substantially depends upon the effectiveness of the decision making.

If the decisions are practical and useful, maximum exploration of the resources, their use at the minimum cost and reducing the leakages will be quiet easier.

Not only that, but productivity may also be favorably increased.

4. Execution of Managerial Functions

Decision making is the “Key of management functions and synonymous with Management.” No Activity may be undertaken in any enterprise or institution without proper decision making.

Decision making is essential for all activities of every institution, right from planning to enforcing controls, otherwise, the accomplishment of the tasks will not possible.

If it is said that the management functions are dependent on decision making, it will not be an exaggeration.

5. The Success of Overall Institution

It is said that good and timely decisions may yield success for the institution, whereas bad and delayed decisions may push the whole institution to peril.

Hence, decision making is essential for the whole institution, since it provides Momentum to it, continuously operates the institution, provides a higher outcome at low cost and sustains the existence of the institution.

Decision making may ultimately affect the institution.

Related: 19 Essential Elements of Good and Effective Planning.

6. Technical Changes and Complications

Consistently ongoing changes in the technical field and the complements of the business world have added to the importance of decision making.

Today the risks are much more, as compared to the past and the decision making in present times effects a large number of people and the large volume of capital.

Similarly, various sections of the society are also affected by the business decision making, as society is highly interrelated.

7. Solving the Problems

While explaining decision making as the process of solving the problems, it may be said that in this process, we search various alternatives for solving the problems and select the best of them.

In this way, the problems may be solved by good and effective decision making.

8. Measurement of Managers Success

The decisions taken by the managers are very important for achieving the objectives and goals of the Institutions because their success or failure depends on these decisions.

Importance of Decision Making
Importance of Decision Making in Business

If any institution advances ahead speedily on the way of progress, to achieve its objectives and goals, Its managers are regarded to be intelligent, capable and efficient.

Their efficiency is proved by the art of taking timely and economically proper decisions.

That is why “Quality of decisions taken by the managers is the measurement of their effectiveness and utility in the organization.”

Related: 23 Key Factors Affecting Business Environment (With Examples).

9. Less Risk

In present-day business and non-business areas, a lot of risks may be seen.

To reduce them, solid decisions are required to be taken.

These decisions should completely based on facts, knowledge, constructive approach, rational, etc., so that the decisions of the managers may be more reliable, and business and non-business risks may be reduced.

10. Emphasis on Professionalising the Management

Decision making is a mental and intellectual activity. Effective decision making depends upon the Talent, skills, and efficiency of the persons making decisions.

Since decision making is the measurement of the success of the business, it is essential that decision making may be good.

Good and effective decisions may be taken only by those managers, who are specialists in it.

A professional manager is a professional decision-maker.” Decision making substantiates the fact of professionalizing the management.

11. Determination of Business Policies

Decision making is of distinct importance for the determination of business policies, the reason being that the management has to prepare various reports on economic and non-economic issues and general and specific policies, etc. relating to the business.

These reports present information about the objectives and activities of various departments and sub-departments.

For performing this function, the management has to take several decisions.

12. To Offset Changes and Uncertainty

The future is always uncertain and changing. So, this is not necessary that the decisions taken presently may be enforced in the future also, with the sum economy.

Although no decision-maker may remove the risks altogether, he may remain cautious by taking suitable decisions.

Besides, decision making has also a substantial role in making suitable changes in the elements of planning and constituents, for the development and expansion of the organization.

Thus, now you know the importance of decision making in management.

Read More:

Scroll to Top