Threats and Opportunities that Impact Decision Making in the Business Environment

1040 words (4 pages) Business Assignment

18th Nov 2020 Business Assignment Reference this


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The business environment is increasingly volatile and involves managers frequently operating in the context of risk and uncertainty, a manager who can demonstrate effective strategic decision-making skills in these challenging circumstances is more likely to establish a competitive advantage.  This paper will draw on relevant and recent research to highlight some key threats and opportunities that can impact on decision-making from both an individual and organisational perspective.

(Barraquier 2011), with her research based in a structured and highly regulated business field, emphasises the importance of the individual within the organisation in making ethical decisions, utilising the experience and judgement of middle management, in contrast (Sibony, Lovallo et al. 2017) argue that managers have difficulty addressing biases, irrespective of what they learn about the nature of these biases, and instead argue for the importance of moving away from focussing on the individual level, towards strategic decision-making processes at an organisational level, proposing a model using seven levers to provide managers with a framework by which more informed decision making can be built into the governance of an organisation to counter the effect of biases experienced by individuals.

The interplay between individual bias and the impact on the organisation is further explored by (Barraquier 2011), she asserts that ethical behaviour is established though an intuitive process of judgement developed through management experience which weighs up the various factors, and as a result senior management should trust the decisions of managers closer to the immediate situation who, she argues, will be better placed to balance decisions of ethics and profit in the interest of the organisation.  However (Enders, Konig et al. 2016) argue that while executives are largely effective with strategic decisions where objectives are explicit, in more complex scenarios they found there was an increased risk that managers can jump to initial solutions instead of exploring a wider range of options, and thereby result in less effective outcomes.  (Enders, Konig et al. 2016) argue that a decision matrix tool can help frame a wider range of options and criteria to guide decision-making and aid communication of solutions.

While the evidence suggests that decision making tools can be effective, (Enders, Konig et al. 2016) acknowledge the importance of balancing the effort needed to use these tools properly and the relative complexity and risk of the decision required.  (Von Bergen, Bressler 2018) argue that cognitive biases can support simple decisions and reduce the time and thinking needed by offering guiding principles for decision making.  However, in their work studying entrepreneurs, (Von Bergen, Bressler 2018) also highlight the risks of confirmation bias, whereupon individuals demonstrate an over reliance and trust on evidence that supports existing beliefs.  It can be seen from these studies that there is a significant body of evidence challenging the effectiveness of strategy and decision-making, which is often held to be rational and subject to careful considered.

(Schoemaker, Tetlock 2017) argues that more reliable decision making creates a competitive advantage over time and they describe five strategic features whereby managers can combine the benefits of using both artificial and human intelligence to produce more informed judgements.  Risk and uncertainty – using big data and predictive skills to work things out….but while this may be useful to organisations with large budgets and resources – what about other organisations?

MINDSPACE & Going on the journey – are practical methods for developing a strategic direction that is more flexible and dynamic for uncertain times.

(Favoreu, Carassus et al. 2016) argue that, despite the extensive use of strategic planning across the public sector over more than three decades, the impact on performance as a result of this discipline is still unclear.  They argue that a mixed approach to strategic decision-making, based on both a rational / planned approach, together with sufficient flexibility to respond to emergent situations (taking account of the complexity of interactions between multiple stakeholders and policies decisions that change and evolve over time). Personal experience from working in the NHS supports this approach, increasingly it is acknowledged that coproduction, where stakeholders are involved from the beginning and throughout strategic development, is much more likely to result in more positive outcomes than simply developing solutions from an organisational perspective.


  • BARRAQUIER, A., 2011. Ethical Behaviour in Practice: Decision Outcomes and Strategic Implications. British Journal of Management, 22, pp. S28-S46.
  • ENDERS, A., KONIG, A. and BARSOUX, J., 2016. Stop Jumping to Solutions. MIT Sloan Management Review, 57(4), pp. 63-70.
  • FAVOREU, C., CARASSUS, D. and MAUREL, C., 2016. Strategic management in the public sector: a rational, political or collaborative approach? International Review of Administrative Sciences, 82(3), pp. 435-453.
  • INTEZARI, A. and PAULEEN, D.J., 2018. Conceptualizing Wise Management Decision‐Making: A Grounded Theory Approach. Decision Sciences, 49(2), pp. 335-400.
  • LIU, C., VLAEV, I., FANG, C., DENRELL, J. and CHATER, N., 2017. Strategizing with Biases: Making Better Decisions Using the Mindspace Approach. California management review, 59(3), pp. 135-161.
  • SCHOEMAKER, P.J.H. and TETLOCK, P.E., 2017. Building a More Intelligent Enterprise. MIT Sloan Management Review, 58(3), pp. 28-37.
  • SIBONY, O., LOVALLO, D. and POWELL, T.C., 2017. Behavioural Strategy and the Strategic Decision Architecture of the Firm. California Management Review, 59(3), pp. 5-21.
  • VON BERGEN, C.W. and BRESSLER, M.S., 2018. Confirmation Bias in Entrepreneurship. Journal of Management Policy and Practice, 19(3), pp. 74-84.

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