5 main tools for decision-making

As a member of the business community, there will always come a time when one has to make some very tough decisions. Whether they are for the advancement of the company or a way to cut costs and take a loss, these decisions could be the most important ones. That is why there are multiple ways to improve decision-making as well as come to conclusions based on reasoning and logic. Decision-making can tend to be a hard time, but with the help of these tools, those decisions look a lot less difficult.

 

Examples of decision-making techniques

 

• Pro/con list
• Cost-benefit analysis
• Trial and error
• SWOT analysis
• Pareto analysis 

 

Pro/con list

 

Among the simplest tools is the classic pro/con list. Some people refer to it as a t-chart, but the concept is the same. The main idea here is to be able to compare and contrast the many different benefits of a certain decision. For instance, when figuring out whether a company needs to purchase a certain product, the members of the company could surmise a conclusion based off potential benefits as well as risks. A pro/con list can be a quick way to make a decision in an efficient way.

 

Cost-benefit analysis

 

A key tool for important financial decisions, a cost-benefit analysis is a way to visualize the potential factors of certain money spending. This tool allows for the ability to determine potential costs of products or services and what benefits may come along with them. The point being to save money but make the most out of certain decisions, and this tool is the perfect one to accomplish this. The cost is measured, and if the outcome seems worth it, then there is a good balance within the decision. Use this tool for the best possible return on investment.

 

Trial and error

 

Another common tool, but one that has proven worthy for years and years now. There is simply nothing like trying and failing, only to continue this cycle until the outcome is perfectly executed. Best suited for decisions of a smaller scale, it allows for time to be taken in order to assess the best possible outcome in real time. If time is available, then the better this tool works, for it allows for more trials. While it may seem redundant, there is no comparing real life trials that simulate all kinds of possibilities. The best way to be sure that something will work is to measure it with time and patience.

 

SWOT analysis

 

This tool is generally presented in a graph format and stands for strengths, weaknesses, opportunities, and threats. A tool that encompasses all the most beneficial aspects of the aforementioned tools, but requires a bit more time to execute. It is an in depth analysis that looks into deeply rooted flaws, while also highlighting benefits that cannot be overlooked. By looking at opportunities and threats in addition to basic strengths and weaknesses, a wider picture is seen, thus allowing decisions to be based on the way they will affect the largest portion of the company or business.

 

Pareto analysis

 

Finally, there will always need to be a time to make the tougher decisions. For these, the Pareto analysis is recommended. Named after Vilfredo Pareto, he came up with the idea that in the world, there is a scale that determines that 20% of things being factored into a decision often allow for 80% of an organization's continuing growth. This tool allows for leaders to decide which decimos will have the greatest impact on the wider scope of the company as a whole. Making a diagram for the Pareto analysis is recommended, and can visualize the more important aspects of a company, as well as what may need more work, and what needs to be cut off completely.

 

We recommend that you continue updating yourself on the latest trends and acquire the right knowledge. If you want to know more about tools for decision-making and how to use them, we invite you to take a look at our Executive Master's degree in Business Administration.