Decision making is the process of identifying the options available and then choosing a specific course of action to solve a specific problem. Effective decision making involves being able to make decisions within a particular time frame. It also requires a manager to adequately assess the risk involved if the decision is implemented.
Problem Solving is the broad set of activities involved in searching for, identifying and then implementing a course of action to correct an unworkable situation. Decision Making is the process of identifying the options available and then choosing a specific course of action to solve a specific problem. Managers must participate in the decision making process daily, to meet the aim of a business in an efficient and effective manner, while problem solving is a far more formal and lengthy process, to save a business from an unworkable situation. Problem solving is only necessary if a manager fails to make beneficial decision making.
The consequences of poor decision making can lead to failure of a business, loss of profit, loss of employees, loss of regular customers and/ or bad reputation for the business, as NASA discovered tragically in 1986. Another example is Blockbuster not adapting to the current technological influences acted as a catalyst to the business going bankrupt. An example of a business adapting to the technological influences is Video Ezy creating the portable kiosk for rental dvd’s.
Depending on what phase a business is in, it can affect the decision the owner. Each phase of the business cycle poses new challenges the business needs to overcome. During the establishment phase, decision making could focus on financial stability and achieving public notoriety. Growth would primarily aim to continue the revenue increase, and make sure the business doesn’t collapse under its own weight. During the maturity phase a business must make important to keep the business on the right path. During the post-maturity stage, the business must make appropriate decisions to go into a renewal, or to hold out and stay in a steady state, to avoid decline.