Information Reduces Uncertainty - Assignment Example

Information Reduces Uncertainty Table of Contents Introduction 3 Method followed to gather information 3 Approaches for data collection 4 Decision Making Process within the Organization 6 Critical Evaluation with Examples 7 Conclusion 9 Reference List 10 Introduction Information is the most important factor that plays a key role in reducing the uncertainty related to a particular topic. In order to conduct a business, it is very important to gather information regarding the field in which the entrepreneur prefers to conduct the business. Asymmetric information regarding a particular subject may lead to failure of the business process and the company may run at a loss (Zhang, 2006). The business research is considered to be an important management tool that helps in the decision making process of the organization. The managers are expected to conduct the business research in order to gather some information regarding the functioning of the organization (Koufteros, Vonderembse and Jayaram, 2005). They also conduct the market research in order to determine the relevant information about the competitors in the international market and plan out strategies to make the organization perform well. Zikmund, 2009 has pointed that business research becomes increasingly essential for the companies to carry out a successful business. However, irrelevant information collected by the managers leads to an incorrect decision making procedure and the company would not be able to judge its market position. The research offers a scope to the researcher to understand the importance of collecting relevant information from the market. It also aims to make the researcher carry out a critical evaluation of the statement that whether information about a particular field reduces the uncertainty in business. Method followed to gather information Zikmund and Babin, 2009 suggests that only way to gather business related information is by conducting an overall survey on the market and analysing the data collected. In order to gather the relevant information, the business research has to be conducted by the managers in various fields because the decision making process within an organization is based on the data that is collected (Lambert, Leuz and Verrecchia, 2007). Business decisions are taken in each and every step of the business activities that are manufacturing, sales, operations, logistics, human resource management and marketing (Van Nieuwerburgh and Veldkamp, 2009). Based on the information collected related to the demand of a particular product in the market, the company can make decisions on the manufacturing and the sales activities. In case the demand for a product is high, the company can increase its production decision. Further, the inventory management for the future is also an important task that the managers need to undertake in order to overcome the crisis period. However, in case of the human resource management, a company’s HR manager recruits its employees based on the information provided in their bio-data (Nicolaou and McKnight, 2006). The managers need to be careful regarding the incorrect information that is provided, which may lead to selection of inefficient candidates. Hence, this shows evidence that incomplete or incorrect information leads to an uncertainty in any kind of business activities. On the contrary, the companies adopt marketing strategies in case a new product is launched. Business research helps the firms to reduce the level of uncertainty that may lead to further issues in the organization (Zikmund and Babin, 2009). Approaches for data collection The promotion of the newly launched product creates awareness among the customers regarding the product that in turn affects their purchase decisions (Liang, 2005). However, the business research that is carried out by the managers depends on four factors that is the time, source of data, nature of the decision that is taken and the benefits versus the cost of conducting the business research (Zikmund and Babin, 2009). Carrying out a research is always essential before initiating a business, but it is possible only when there is enough time to conduct the research. Further, the source from where the data is collected also plays a key role as source needs to be authentic. There are benefits as well as costs associated with the research process (Lambert, Leuz and Verrecchia, 2007). Information about a topic can be collected by following various approaches such as the primary as well as the secondary approach. Under the primary data collection methodology, there are two types of approach such as the quantitative as well as the qualitative approach. The qualitative approach mainly comprises of collecting information related to the company, from the managers as well as the employees who are not expressed numerically (Van Nieuwerburgh and Veldkamp, 2010). It helps to derive a conclusion regarding the performance of the organization and also the annual profit and sales of the company. On the contrary, the quantitative approach implies collection of the data that is numerically expressed. The data can be used for carrying out the further analysis in excel sheet that helps to derive the exact performance of the company based on which the managers can plan out the strategies to enhance the growth of the company (Coenen, Levin and Wieland, 2005). Therefore, the study says that the information gathered is necessary to carry out a detailed analysis of the company’s performance in the international market and also the capability of the company to compete with the rivals. The data is expected to provide vital information regarding the environmental conditions and provides an opportunity to run business successfully (Zikmund and Babin, 2009). Figure 1: Decision Making Model for an Organization (Source: Zikmund and Babin, 2009) Decision Making Process within the Organization The organizations follow decision making model which comprises of eight steps for an efficient decision making. The model involves eight steps to decision making with the initial steps dealing with the identification of the problem and establishing criteria for appropriate decision making. For example the organization is about to undertake an organizational change, it has to identify the main motive to undertake the change and plan for the change. However there is also a need to evaluate the criteria selected for appropriate decision making and in case the criteria does not seem to be feasible there is a need to generate alternatives for undertaking appropriate decisions. Apple Inc. and Samsung carries out their own decision making processes by following this model and the companies have been successful in setting up its reputation. However the process of Apple Inc. is more effective as compared to Samsung in undertaking change management. The next steps in the model reflect the evaluation of the alternatives and then choose the most suitable alternative with the help of which the company would gain success in the market. The efficiency of the technique used for the decision making help in final evaluation of the decision and the ultimate change that is to be incorporated in the organization. Figure 2: Chart comparing the performance of Samsung and Apple Inc. in 2013 (Source: Heracleous, 2013) The figure shows that Apple Inc. has captured a larger market share as compared to Samsung due to its efficient decision making process in the performance management. Critical Evaluation with Examples For example, managers of Apple Inc. conduct a business research on the demand of the customers related to the smart phones in the international market. However, the research has provided them with valuable information regarding the production of smart phones by other rivals like Nokia and Samsung and the features that they offer in their smart phones (Hellwig and Veldkamp, 2009). The company also collects feedback from the customers regarding their needs and desires that would help the company to produce the product according to their demand. The study has also revealed that Apple Inc. has successfully launched its range of smart phones that has satisfied a wide range of customers and currently enjoys a monopoly power on the smart phones (Lambert, Leuz and Verrecchia, 2007). Figure 3: Graph on Net Income earned by Apple Inc. (Source: Heracleous, 2013) Another example to be considered is that of the leather goods producing company named Mont Blanc, which is known to produce bags wallets made out of pure leather. It is also known to manufacture high quality pens for its loyal customers (Aadland, Caplan and Phillips, 2007). However, the company plan to shift its business to the furniture sector and hence, the managers have undertaken various research techniques to determine the choices of the customers (Aadland, Caplan and Phillips, 2007). The business research conducted by the managers have provided valuable information that contributes to their decision making process and the managers can undertake the strategies to enhance their production process (Lambert, Leuz and Verrecchia, 2007; (Zikmund and Babin, 2009). The research can also provide them an idea regarding the designs that the company can use in its furniture in order to make them look more attractive to the customers. The unique designs often draw attention of the customers and help the company to increase its sales (Lambert, Leuz and Verrecchia, 2007). Further, the marketing techniques that Mont Banc adopts also provide its loyal customers with the information about the products that the company plans to launch in the near future. Conclusion The study has been carried out to critically evaluate the statement that information about a particular subject reduces uncertainty. The main idea that has been covered in the study is that the business research is to be carried out by the entrepreneurs before initiating a business or in order to run the business smoothly. Most of the businesses prefer to carry out an overall market analysis regarding the field that in which the business is expected to initiate. The complete information about the customers’ demands helps the managers to plan out strategies and introduce products that are preferred by the customers. Decision making process is followed in various fields related to a business and its management. The companies follow the decision making model in order to develop steps for effective decision making. The process can help the companies to undertake appropriate decisions leading to high overall performance and also helps in future growth of the companies. The study has been carried out on the companies like Apple Inc. and Mont Blanc where the managers take up strategies to launch new products based on the market demand. They carry out a detailed analysis on the data collected based on the customers in the international market and undertake managerial decisions. The study reflects that the business research is necessary in order to reduce uncertainty in the business process. Reference List Aadland, D. M., Caplan, A. J. and Phillips, O. R., 2007. A Bayesian examination of information and uncertainty in contingent valuation. Journal of Risk and Uncertainty, 35(2), pp. 149-178. Coenen, G., Levin, A. and Wieland, V., 2005. Data uncertainty and the role of money as an information variable for monetary policy. European Economic Review, 49(4), pp. 975-1006. Hellwig, C. and Veldkamp, L., 2009. Knowing what others know: Coordination motives in information acquisition. The Review of Economic Studies, 76(1), pp. 223-251. Heracleous, L., 2013. Quantum Strategy at Apple Inc. Organizational Dynamics, 42(2), pp. 92-99. Koufteros, X., Vonderembse, M. and Jayaram, J., 2005. Internal and external integration for product development: the contingency effects of uncertainty, equivocality, and platform strategy. Decision Sciences, 36(1), pp. 97-133. Lambert, R., Leuz, C. and Verrecchia, R. E., 2007. Accounting information, disclosure, and the cost of capital. Journal of accounting research, 45(2), pp. 385-420. Liang, H., Laosethakul, K., Lloyd, S. J. and Xue, Y., 2005. Information systems and health care-I: Trust, uncertainty, and online prescription filling.Communications of the Association for Information Systems, 15(1), p. 2. Nicolaou, A. I. and McKnight, D. H., 2006. Perceived information quality in data exchanges: Effects on risk, trust, and intention to use. Information Systems Research, 17(4), 332-351. Van Nieuwerburgh, S. and Veldkamp, L., 2009. Information immobility and the home bias puzzle. The Journal of Finance, 64(3), pp. 1187-1215. Van Nieuwerburgh, S. and Veldkamp, L., 2010. Information acquisition and under-diversification. The Review of Economic Studies, 77(2), pp. 779-805. Zhang, X., 2006. Information uncertainty and stock returns. The Journal of Finance, 61(1), pp. 105-137. Zikmund, W. G. and Babin, B. J., 2009. Essentials of Marketing Research. 4th ed. Cengage Learning. Read More