Decision Essay Example

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The Importance of Decision-Making

Executive Summary

The decision to start one’s own a business is not an easy. According to the Bureau of Labor Statistics (2010), the number of business establishments set up per year depends on the overall status of the economy. While some businesses thrive and grow, others do not make it beyond their first year. This reason makes the decision whether to continue with employment or begin one’s own business very difficult. Various reasons have been given to explain why businesses fail and among the top most reasons given almost every time is either lack of financial management skills or poor marketing knowledge or skills. All these reasons may be true, however, it is important to realize that all these actions are as a result of a poorly thought and made decision. The impact of decision making to business success has always been underestimated yet it is the foundation of the entire process. One decides when to leave their current well paying job then they decide to invest a certain amount of resources in order to begin a business and the process goes on. The key thing here is that the quality of decisions one ultimately makes influences the kind of results one will get.

In order to make good personal decisions it is important that one follow at least one of the outlined decision making frameworks. Taking into consideration any of the well-known frameworks improves one’s chances of making the correct decisions. It also broadens one’s perspectives and helps them identify new business challenges that would have otherwise gone unnoticed. Making the right decision has never been an easy task and that is why the importance of learning how to make the correct judgment cannot be overemphasized.


Despite the fact that making decisions are an important aspect of life many people do not receive any form of training in it (Hammond 2008).Poor decision making can be very costly and the experience can not only be traumatizing but also mark the end of a dream, career or a start-up. Caprino (2012) notes that good decisions are those are in touch with one’s intrinsic values aspects that are considered under the ethical framework. This paper finds it important that one looks at the different decision making theories and analyze the information contained therein to see it how it has influenced my decision to start my own business. When making decisions, it is important that clearly understand their goals and objectives. One then is able to choose the correct framework thereby, preventing one from ignoring key objectives, causes and criteria and other relevant information that would be crucial during decision-making process.

As an emerging entrepreneur, it is important that one does not leave any decision unprotected. It means that one has to be able to forecast expected challenges and prepare for them adequately. The ethical discussion section will delve more on this and other related matters.

Personal reflection is very important before one makes any type of decisions hence its significance should not be underestimated. Before opening a business, I realized that a personal reflection helps one to identify the reasons why they want to go into business and what they hope to achieve. This makes it easier for one to develop a business plan that is not only unique but also one is compatible with ones abilities.

Analysis of the Ethical theories in Decision-making

One of the qualities of a good decision is that it is ethically correct. Christopher (2012) notes that it is surprising that only fifteen percent of businesses have the ability to make the effective decisions. Most of the decisions that are described as poor or bad most likely have failed or ignored certain ethical considerations. Ethical decisions can be described as rational, logical and made upon full disclosure of all relevant information and consequences (Brown 2005).

The ethical decision theory proposes that one go through the four stages before he/she makes a decision (Palmer 2012). The first stage is the awareness stage, whereby one becomes aware of the fact that the decision requires the application of a moral criterion. It requires one to become morally aware. When starting a new business this is the time to decide whether the business was going to be involved in legal or illegal activities. This decision did not entirely mean venturing into any outlawed activity rather it called for examination of how the business will abide by the laws of the land as well as societal perceptions of morality. The second stage calls for the application of the chosen ethical criteria. During this stage, one finds himself/herself trying to find out how to perform the business in a legal and moral manner. In this stage, one begins to find out the necessary legal documentation relating to various business activities for instance taxation, in order for the business to be compliant with all the set regulations. The third stage calls for one to develop an intention to act consistently with the decision made in the second stage. This stage would involve making a decision to abide by a certain code of conduct or set business practices standards for the entity. The final stage calls for one to follow up all decisions made in the previous three stages. Hence, all earlier made decisions must be made in a logical and rational manner.

When making it through each of the stages of research has shown that, there are factors that influence why a person chooses to make such a decision (Palmer 2012). These factors have been either described in terms of the ethical dilemma whereas other researches have chosen to look at them in the context within which the decisions are made. In addition, there are researchers who have chosen to look at the matter in terms of personal attributes.

The degree of moral intensity influences the type of decision one makes in each of the four stages. The argument presented here is that one chooses to do wrong depending on the perceived extent of harm expected. If a person believes that the harm is minimal or insignificant the there is a huge likelihood that the person is making a poor decision. Take, for example, if I chose to partly comply with the tax laws and regulations because I believed that the lost revenue has a dismal effect on the state’s revenues. This is a decision that shows am ready to comply to the extent that makes me comfortable and does make me feel guilty.

Factors such as culture, organizational climate, leadership are also likely to influence the type of decision one is likely to make at each of the stages. The role of rewards and punishments has also been studied to establish the extent to which they influence one’s probability of acting in an unethical manner. As a person starting wishing to start their own business external influences such as the way one was brought up and societal expectations, influenced the type of decision that I made. These considerations have the tendency of affecting a person’s moral mechanism hence their moral awareness is either lessened or heightened.

As an entrepreneur, perhaps, the biggest factor that influences whether we make ethical decisions or not is individual attributes. One’s individual state of mind or level of moral development predisposes them to making certain kinds of decisions. Research has established that religious people are likely to make ethical decisions compared to those who are not (Palmer 2009).

Uncertainties, Risk and Analysis in Decision Making

It is sometimes difficult to accurately predict the outcome of any decision thus the element of uncertainity sets in. When making a decision to start a new business there are factors that are not within your control. If any decision is to be considered effective then there is a need to reconcile uncertainties with decisions. One has to perform risk analysis or use the statistical decision theory to come up with a decision. The process begins with developing and hypothesis then evaluating it using a suitable statistical decision making model. The advantage of undertaking this process is that it helps one analyze potential risks and helps them come up with effective solution. The decision tree is the most basic technique that one can use to deal with uncertainties. It helps in a graphical manner actions and consequences of a particular decision. During the business planning process I found this technique to be quite helpful when dealing with uncertainties.

Strength and Weakness Analysis

Caprino (2012) confirms that poor decisions are made because they could have been made from the point of weakness or disempowerment. Entrepreneurial decisions that are not based on any concrete market information are likely to lead to the collapse of the business; therefore, it was important that before I opened the business I establish that there was a need or gap in the market. Small business’ success depends on its ability to meet market demands thus conducting market research was crucial.

One the strengths of the ethical decision making model lies in the fact that it recognizes the role or moral sensitivity or recognitions. Sometimes this is overlooked during the business planning process but it is a critical matter that determines the future of the business. Kidder (2012) notes that ethical insensitivity causes moral failures. He gives an example of how various big companies such as Ford Motors have incurred huge losses because of being ethically insensitive. This goes to shows that ethical insensitivity is an issue that both large and small organizations need to address.

Another advantage of this theory is that it addresses issues pertaining moral judgment by offering a clear course of action. The four stages outline ethical processes that one is likely to go through and it suggests a different course of actions. Conventional thinkers find this theory very useful in terms of the guidance it offers and the fact that it helps people to live up to their expectations (Kidder2009). Successful businesses are built on sound principles and the theory provides for this especially since it is believed to borrow heavily from Kohlberg’s stages of moral development.

One of the disadvantages of the ethical or bounded rationality theory is that it fails to match the strict rationality with simplicity and applicability. The theory overemphasizes the role of morality and fails to recognize other factors that influence the decisions. It fails to differentiate between rights and obligations grouping them all under morality hence making the entire process complex and sometimes cumbersome.


Decision-making is a complex task and it is important that more people get some form of training in it. The success of any business depends on the quality of decisions that managers or the owners make otherwise they may end up being too costly for the business. It is advisable that before making a decision one considers following at least one of the well-known decision making theories. These theories are help individuals identify areas that would have otherwise gone unnoticed or ignored hence improving the quality of the decisions made. It is clear that going through the four stages makes it easy for a person to develop their own action plan. The stages can be influenced by numerous factors; however, its strong foundation on moral judgment and ethical sensitivity ensures that its users end up making the correct decision.


Seeing that decision making is a very important function then it becomes imperative that managers or business owners receive some form of training on how to improve their decision-making skills. business success depends on the quality of decision, therefore, employees as well as the management need to attend at least some form of the training at least once a year.

Improving the quality of decision made is a continuous process that begins with creating awareness on the effects of poor decision-making. Such an exercise would help businesses perform a ‘decision audit’, which would be useful in identifying what went wrong should an action plan fail due to poor decisions. For new businesses, such an audit would enable them keep track of the decisions made and the effects that they have had on their businesses.

Organizations need to understand which decision-making theory best serves their interests. This will enable them to find harmonize their decisions despite differences in personalities. Having an established framework helps businesses to realize their decision goals and objects hence improving the quality of decisions made.



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Palmer, D. (2012). Normal organizational wrongdoing: A critical analysis of theories of

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Stephenson, C. B. (2012). What causes top management teams to make poor strategic

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