Business Decision Making - Internet Cafe - Case Study Example

Business Decision Making – Internet Cafe By Lecturer’s and Every individual continuouslymakes decisions at every stage of his life, either consciously or sub-consciously. These decisions determine the kind of life he leads or the steps he makes to achieve the goals he sets in his lifetime, and greatly determine what he achieves. Apparently, the decisions are key determinants of the developments he makes towards achieving the set goals. They determine whether he moves forward toward, or backward away from achieving his set objectives. For any business as well, decision making happens to be a habitual process that determines the business’ success. Right from the business idea conception, decisions have to be made to determine the kind of business one takes up all the way to how the business’ goals will be achieved. The decisions made greatly determine the success of the business. In this paper, I seek to explore decision making as a vital aspect in an enterprise. I will then specifically delve into decision making concerning an internet café business. To start with, I will give an account of the various business decision types before looking into the actual process of decision making in connection to the business case at hand- an internet café. The various types of decisions include programmed decisions, non-programmed decisions, strategic decisions, tactical decisions and operational decisions. Programmed decisions are standard decisions that follow a similar routine every time. Coming up with such decisions can be done by many as their nature allows them to be written down as fixed steps in a series. They may include the day to day happenings in the business like opening and closing hours for the café or the routine activities that occur during the café’s operation. According to their nature, it is possible to write them just as computer programs. Non-programmed decisions are non-routine. For these decisions, each is not like the any previously made. In an internet café, such decisions are made, for instance, in coming up with solutions to occurrences that are not usually preplanned, like network or machine breakdowns. Strategic decisions on the other hand affect a business’ long term direction. They can be said to be “important, in terms of the actions taken, the resources committed or the precedents set” (Mintzberg, Raisinghani and Theoret 1976 p.246) According to Eisenhardt (1989), they “(1) involve strategic positioning, (2) have high stakes, (3) involve many of the firms functions’, and (4) are considered representative of the process by which major decisions are made at the firm” (p.546). They are also described by Eisenhardt & Zbaracki (1992) as “those infrequent decisions made by the top leaders of an organization that critically affect organizational health and survival” (p.17). Strategic decisions in an internet café business may include, say, the amount of capital to be committed in the business and the course of action the business takes concerning its legal and financial affairs together with the approaches to be taken in structuring the business. Tactical decisions are medium term decisions concerning the implementation of strategies, like the kind of marketing a business should do or the number of extra staff it should recruit. For an internet café, these may include decisions on the appropriate marketing channels or means of advertising the services offered, they have to be done to choose the most effective means of promoting the business. They also include decisions like the number of staff members required and their qualifications. For instance, the café manager has to come up with the appropriate number of staff to oversee its smooth operation basing on the size and scale of operation together with the array of services engaged in. Finally, operational decisions are mostly short term or administrative decisions, and mostly concerning how tactics can be implemented, like about the firms to be used to make deliveries. An internet café has to determine the companies it has to subcontract some of its activities. This should be done in consideration of the cost, efficiency, reliability and appropriateness of such companies for the job. Clearly, according to the nature of each type of decision, it can be seen that they are each made at certain particular levels. Strategic decisions bear the most weight in the way a business is run and are therefore made by the business owners or the business board of directors. Tactical decisions are mostly done by the business’ managers. Operational decisions are made by most of the personnel in their day to day activities while on the job, such decisions are made by all from the top echelon to the subordinate and have to do with the practical execution of the activities they do. Complexity theorists (like Stacey, 1995), in their works argue that an organization is just like a system whose long term outcome is a result of the organization’s entire history and not of one action or decision in singularity. Hamel and Prahalad (1989) echo this view when they suggest that a firm should establish “strategic intent.” Eisenhardt (1997) puts more weight to the idea by claiming that “improvisation”, just as in drama or jazz, is a relevant metaphoric description of strategic management. Dean and Sharfman (1996) in their research, however, note that identifying strategic decisions for businesses by managers is not a big issue, and that establishing generalisable rules of making successful decisions remains the key objective of research in strategic decision making. Therefore, to reach at important decisions for the internet café business, the process of arriving at such decision needs to be having certain characteristics so as to be successful. The process has to be comprehensive. Fredrickson & Mitchell (1984) describe comprehensiveness as a rationality measure referring to the extent to which an organization attempts to be inclusive or exhaustive in the making or integration of decisions. It refers to the extensiveness of the process of decision making relating to short-term threats the café might face and opportunities alike (Miller, Burke & Glick, 1998). According to Frederick and Mitchell (1984), a comprehensive process in decision making would be positive for the café if the industry is stable. However, if the industry is turbulent, then it would be harmful for the business to make a comprehensive approach in coming up with decisions. The decision process has to be extensive. Extensiveness in this case relates to long-term threats and opportunities. Decisions on long term plans for the café would have positive results as regards its growth and development if it is set in a turbulent industry (Miller & Cardinal, 1994). The decision making process has also to be speedy. A fast decision making process would lead to better performance of the internet café if the environment is a high velocity one (Eisenhardt, 1989). As such, it is highly advisable for the café management to make speedy approaches in coming up with decisions regarding the business to achieve the highly desired good performance. For the café to come up with the any decisions concerning its operations, it has to follow a certain process that determines whether it makes the right decision or not. There are many approaches the management can take in arriving at the decision. However, for the best results, a certain sequence has to be followed. To start with, the internet café’s management should identify the problem at hand. In all decision making, the recognition of the fact that there is a decision to be made on a certain issue is the first of steps in decision making. The management cannot just arbitrarily initiate the decision process since decisions have to result from attempts in addressing specific needs, problems or opportunities. The café managers may realize that the number of employees is too high relative to the scale of service the business offers. The problem to be addressed in such a case is the way in which the cost of operation is to be controlled. Secondly, information has to be sought concerning the problem at hand. The cafe managers have to seek a wide range of appropriate information as to what the potential cause of the problem is, the processes and the people involved and the constraints they may put on the process of making the appropriate decisions to address the problem. After enough information has been collected, the next step is brainstorming the solutions. The managers, upon understanding the issue to address, should then come up with a list of possible solutions. This is a step that may take a few seconds, minutes or even several months depending on the decisions nature. In some cases, it may involve collaborative planning and in some it is an individual one-off affair. The next stage in the process is choosing an alternative. The managers will need to weigh the pros and cons of each of the possible solutions they will have initially determined in order to select the best depending on the possibility of success in addressing the issue to be solved. One crucial thing in this stage that the managers can do is to seek a second opinion concerning the chosen solution by consulting other industry players or even researchers in their line of business. Upon satisfaction that the chosen solution meets the standard required to successfully address the problem, the managers can then implement the plan that the solution offers. This stage requires the managers to, after picking on a specific solution, get all the employees or the immediately concerned team or department into action without doubt, conviction will be of great essence at this stage. The managers at this stage have to instill confidence into their team for them to believe the plan will work out. Also, the plan itself should possess characteristics of success for the team to be confident in implementing it. Finally, to determine if the planed solution has borne fruits or has been successful, the outcome will have to be treated to an evaluation. The plan may not always satisfy all aspects of the problem. In some cases, partial success may be the case. Since mistakes are usually made in business, failures in the various aspects of the plan in solving a certain problem will have to be taken as lessons learnt. The next step will then be switching to the next most appropriate solution. For a better decision making process, the business has to adopt modern techniques that have been developed over the years, which offer more efficient and simplified approach in analysing the data collected and which is essential in the process of reaching the most appropriate solutions for the various problems the business may be facing. Various techniques exist to aid in the date analysis, most of them as computer software or applications that make use of technology. One such way that the café can put to use in order to simplify the data it needs to analyse in decision making is the adoption of business intelligence (BI) methods into its decision making framework. Business intelligence is a still evolving concept that was first mentioned in 1958 by H.P. Luhn (Luhn 1958), who was a pioneer in information science. It is an umbrella term that covers many technologies like data mining, online analytic processing, data warehousing, business performance management, business analytic tools and more, which are individually broad enough concepts to make stand alone information science images. The Data Warehousing Institution is one institution that provides training and education in BI. It defines BI as the tools, technologies and processes that are required in extraction of information from data and knowledge from information, then finally help in coming up with plans that lead to business actions that are profitable (Loshin, 2003). Business intelligence is actually one of the best adoption the café business can greatly benefit from as it is an effective way of transforming raw data the business may collect from research it does into information that is meaningful and useful that can used to come up with more strategic, tactical, effective decision making and operational insights (Nicolson, Evelson, 2008). In a nutshell, BI provides ability for a business to gain useful industry and own insights that lead to better performance in decision making, through use of a particular set of tools and technologies. This does not however leave out the human factor. As has been noted, decision making is a very crucial aspect in the day to day running of a business, both in the long and short-term run. The decisions made by the managers and owners of a business are key to the performance of the business. Therefore, for the internet café, poor decisions would lead the business to losses while good decisions lead to high profitability, development and growth of the business. The type of decision reached at is dependent on the process involved in reaching at the decisions. Therefore, the café management has to ensure it follows the right process in decision making to achieve profitability and growth. Finally, it is also important for the management to adopt modern aids in decision making which involve technology and therefore simplify the process apart from being efficient and time saving. Works Cited Dean, J. & Sharfman, M. (1996) “Does Decision Process Matter? A Study of Strategic Decision-making Effectiveness.” Academy of Management Journal Vol. 39, No 2, pp.368-396. Eisenhardt, K. (1989) “Making Fast Strategic Decisions in High-Velocity Environments.” Academy of Management Journal Vol. 32, No. 3, pp 543-576. Eisenhardt, K.M.(1997) “Conflict and strategic choice: How top management teams disagree”, California Management Review, Vol. 39, Iss. 2; p. 42-63. Eisenhardt, K. & Zbaracki, M. (1992) “Strategic Decision Making.” Strategic Management Journal Vol. 13 pp.17-37. Fredrickson, J. & Mitchell, T. (1984) “Strategic Decision Processes: comprehensiveness and Performance in an Industry with a Stable Environment.” Academy of Management Journal Vol. 27 pp. 399-423. Miller, C. Burke, L. & Glick, W. (1998) “Cognitive Diversity Among Upper- Echelon Executives.” Strategic Management Journal, Vol. 19 pp. 39-58. Miller, C. & Cardinal, L. (1994) “Strategic Planning and Firm Performance: A Synthesis of Two Decades of Research.” Academy of Management Journal Vol. 37, pp. 1649-1665. Stacey, R.D. (1995) Strategic Management and Organisational Dynamics. London, Pitman. Mintzberg, H. (1998), “The Professional Organisation” in Mintzberg, H., Quinn, J.B. & Ghoshal, S.(eds.), The Strategy Process. Hemel Hempstead, Herts., Prentice Hall Europe. Loshin, D. (2003). Business Intelligence: The Savvy Manager’s Guide. San Francisco: Morgan Kaufmann Publishers. Luhn, H. P. (1958). A Business Intelligence System. IBM Journal Vol. 2 (4), pp. 314–319. Evelson, B., Nicolson, N. (2008). Topic Overview: Business Intelligence. Forrester Research Papers Business Process Professionals. Ingram, D., 2014. What Are The Steps in the Decision-Making Process of a Manager?, Chron [online]. Available at: http://smallbusiness.chron.com/steps-decisionmaking-process-manager-10601.html Read More