Introduction
Being in a more and more globalized economic world, it’s not easy to make sure any decision would end up with the best reward, for there are a lot of potential problems (competition and market change for instance) may finally lead to a risky situation. This would basically answer the question—do I agree with the notion that “decisions involving huge outlays of capital almost classic gut decisions: they involve risky, inherently ambiguous judgments between unclear alternatives”? However, even I do believe making decisions of most investment would have to face the uncertainty; it is comprehensive to notice some outlays of capital are not so hard to make. This article mainly focuses on illustrating this point of view along with the decision-making theory and some examples from industries.
To get away from useless factors, suppose an ideal rational manager acting exactly in line with the decision-making theory, which means one would effectively following six steps(identify a problem, identify decision criteria, allocating weights, developing alternatives, analyze alternatives, and finally follow up and evaluate). It’s quite impossible for any investment to be successful with any of these steps in an ambiguous situation (although personally the third and fifth step reveals its complexity under most cases and is better been taken care of in particular). That’s the reason I believe this statement has its point under most cases, but with the idea of some outlays of capital can be successfully done through the six steps, some cases in industries remain as exceptions.
The importance of decision making
Proper understanding of the term, risk, is necessary in business decision making. To make it easier to understand, decision making is picking the best choice from various alternatives. As David W. Miller and Martin K. Starr wrote in their book, “Decision is a