lets try this again

Decision Analysis

Faraji C. Edwards

Walden University

Introduction

Decision-making is the most important step in most aspects of life, especially when making decisions regarding business ventures. This task is a very difficult one, and not everyone can be accorded with such responsibility. If the wrong decisions are made, this will compromise any firm’s/organization’s goals, and may cause it to incur heavy losses that may lead to its closure. In this paper, we shall learn more about decision analysis. To understand better, we shall use an example of a decision to engage in a business venture.

Decision to be made

The decision to be made is whether it would be profitable to open an eatery or a barber shop. Every business venture brings with it its own risks. Just like other business ventures, predicting the profitability of opening an eatery and/or a barber shop is not easy. This explains why care needs to be taken when making this decision. We shall discuss briefly about each of these business ventures to help us get informed (No Author, 2016).

Customers spend a lot of money so as to look their best whenever they can, possibly all the time. A lot of income can be earned from the opening of a barber shop. However, this venture can be quite risky to both employees and customers. The chemicals being used in barber shops are to be used with care. Most of these products are quite expensive, not to mention the machinery used by barbers (No Author, 2016). The barbers are expected to maintain proper sanitary conditions when using cutting tools while giving haircuts.

The surfaces in barber shops are supposed to be swept and left clean at all times, so as to make them presentable enough to attract more customers. No one would like to be served in a dirty barber shop. With poor sanitary conditions, it is quite easy to transmit diseases and infections amongst customers, which will ruin the image of the barber shop. Several federal regulations have been established to ensure that barbers serve their customers safely and to their satisfaction (No Author, 2016).

Opening an eatery could also be a very profitable business venture. This may be the case especially when competent chefs have been hired, and when the eatery is located at a strategic place, like within a city. However, an eatery brings with it many risks and downfalls. Many have concluded that one out of every ten eateries succeeds. This opinion mostly comes from those who have already ventured in this type of business. Despite the fact that that notion is quite exaggerated, it is indeed true that the likelihood of this venture failing are quite high. In most cases, the prices of vegetables and kitchen machinery hike a lot (Watkins, 2016).

The owners of eateries often find themselves incurring extra expenses which they had not anticipated. Also, at times, it may not be possible to know the specific preferences of consumers and their allergies too. So the likelihood of customers complaining about allergic reactions caused by eating certain foods is quite high. Cases of food poisoning are also on the rise. Eateries are also prone to fire risks. These risks bring untold losses and damage to eateries, especially when a fire outbreak occurs, and customers are affected (Watkins, 2016).

An entire eatery can get destroyed by a fire outbreak, which may force owners to shut down the business for good, or to spend a lot of money trying to get the business back up running (Risks Associated with Running a Restaurant). Having ignorant employees whose actions affect customers may lead to the filing of multiple lawsuits against an eatery (Watkins, 2016).

Stakeholders involved

The stakeholders involved in making this decision would be shareholders, customers, and community, employees and business partners. In tradition, we find that shareholders are given the most attention of any stakeholder group. These are the investors that own shares of ownership in the company. Maximizing profits for shareholders is the singular focus of corporate governance. Customers and community are often the drivers of a business’s viability and long-term profitability (Cokemuller, 2016).

A changing viewpoint of employees is a primary consideration of the prominent corporate social responsibility (CSR) business ideology. Additionally, employee involvement has become increasingly prominent, and many employees want a voice in important business decisions. Businesses rely heavily on partners that help them provide the best value for their customers. Supply chain partners often collaborate on transportation and logistics, distribution and environmental preservation (Cokemuller, 2016). However, for everyone to contribute to the making of a sound and well-informed decision, proper research is to be conducted. Depending on the decision that will be made, the needed funds will be raised so as to proceed further.

Decision Environment

Three things define the decision environment. These are the certainty, uncertainty, and risk. In an environment of certainty, only one outcome is expected. It is quite hard to determine with complete certainty whether a business decision will yield positive or negative results. For instance, in our case, it is impossible to ascertain which of the two business ventures will guarantee maximum profitability. In an environment of uncertainty, more than one outcome is expected.

This means that the decision maker is completely unaware of what lies ahead. It is even difficult to determine the probability of a certain outcome occurring or not occurring. Looking at our example, making the decision involves a great deal of uncertainty. Whether opening a barber shop will be more profitable than opening an eatery is unknown. In an environment of risk, just as is the case with an environment of uncertainty, more than one outcome is expected.

Group Decision

Seeing as though this can be looked at as a business with multiple partners, the making of this decision will be done as a group. However, for everyone to contribute to the making of a sound and well-informed decision, proper research is to be conducted. Depending on the decision that will be made, the needed funds will be raised so as to proceed further. However, the decision maker has already conducted his research and has all the relevant information that he needs regarding the decision he needs to make. Using this information, the decision maker can determine the probability and the non-probability of an outcome.

However, such information is based on past events/experiences/outcomes. Of these three environments, the one that identifies best with the situation at hand is that of risk.

Conclusion

In conclusion, we learn that making business decisions is a task that should not be taken lightly. This task is not for everyone, which is why only a limited number of people are usually accorded with decision-making authority in an organization. When deciding whether to open an eatery or a barber shop, the risks associated with each of these business ventures are to be weighed and assessed carefully. From what we have learned, it is riskier to open an eatery than to open a barber shop. It would not be wise to venture in a business venture that, despite bringing in reasonable income, is quite risky with a lot of losses.

References

Kokemuller, M. (2016). Different stakeholders in business. Retrieved January 24, 2016

http://smallbusiness.chron.com/different-stakeholders-business-20363.html

No Author (2016). Risk Management | Beauty Salons & Barber Shops. Retrieved January 24,

2016,

Hartford: http://www.thehartford.com/business-playbook/risk-management-beauty-salon-

barbershop

Watkins, D. (2016). Risks Associated with Running a Restaurant. Retrieved January 224, 2016

Chron.com: http://smallbusiness.chron.com/risks-associated-running-restaurant-20838.html