Applying a decision-making model plays an extremely important role for businesses. In this article, 1C Vietnam will provide detailed information about the decision-making model and factors affecting the application of the model for businesses. Let's explore with 1C Vietnam through the article below!

1. What is a decision-making model?

A decision-making model is a tool that describes the organized decision-making process in the field of enterprise management. The model provides an account of the steps required when preparing to make a formal decision in a business environment.

The process of building a decision-making model is an important step that businesses need to take, especially in important decisions, the purpose of which is to ensure the accuracy and effectiveness of that decision.

The steps taken when applying a reasonable decision support model include the following stages:

• Identify the problem: Decision makers need to identify and understand the root cause of the problem to be solved.
• Setting goals: Set specific and clear goals, compatible with the actual conditions of the business.
• Find solutions: Propose feasible and appropriate solutions to solve the problem.
• Compare and evaluate: Compare and evaluate solutions according to certain criteria, based on the actual situation, such as financial resources and capabilities of the business.
• Implement the solution: Deploy the solution in a synchronous and systematic manner, ensuring practicality and feasibility.
• Evaluation and testing: Evaluate the effectiveness of the solution through the proposed indicators and check the consistency with the rational decision-making model.

2. 5 decision-making models to support effective administrators

Below are 5 decision-making models that effectively support managers to help them plan strategically and flexibly in today's volatile business environment.

2.1. Data-driven decision making model

Applying analytics and making decisions based on data is one of the models that helps evaluate wise strategies, especially in situations that require objectivity and efficiency. Instead of being influenced by personal emotions or opinions, teams will focus on facts and numbers to determine the optimal solution. This is especially suitable for members who are proactive, and take clear actions to achieve their goals.

In real-life situations, this model is often applied when facing specific decision-making challenges such as increasing revenue, improving operations management processes, or improving team performance, etc.

Advantage:

• Data-based decisions ensure a clear basis for decision-making to minimize risks and increase the likelihood of achieving good results in business management.

Defect:

• However, this model is affected by pressure from the external and internal environment that affects the decision process. At the same time, implementing this model requires acceptance and implementation of the correct process.

When applying a data-based decision making model, leaders need to pay attention to the following points:

• Ensuring that the problem is defined in a clear, detailed manner, avoiding ambiguity and ambiguity, helps shape the decision in the correct direction.
• Goals need to be built with specific situations in mind, presented clearly and clearly to ensure team members understand the common goal.
• Evaluation of solutions and achieved results needs to be done accurately and objectively, helping to make decisions based on complete and reliable information.
• No cost or time constraints.

2.2. Limited decision-making model

The rational decision support model is limited in data scope to simplify information and avoid "data chaos". Decision makers focus on important sources of information and use their thinking and cognitive abilities to solve problems. This model includes the following steps:

• Understand clearly the goals and important factors related to the specific problem.
• Eliminate search limitations and information constraints to get sound data to support decision making.
• Make quick decisions in a short time, focusing on the main problem.

Advantage:

• Fast decision-making time.
• Focus on the main problem.

Defect:

• High risk.
• The scope of search goals and methods is limited.
• Reflects high individual tendencies.
• Lack of synthesis.

Note: Situations with constraints or limitations on time, resources or information.

2.3. Power-based management decision-making model

The power-based model for decision making is a process approach where the speed and effectiveness of decisions depend largely on the power of the participants. Decisions may be delayed when there are disagreements between parties about goals and solutions. Although this model concentrates power, it also places high demands on the responsibility of individual decision makers.

Advantage:

• Good ability to solve arising problems.
• Centralizes power, helps make decisions quickly and effectively.
• High responsibility, decision makers are responsible for their decisions.

Defect:

• Disagreement in choosing goals can lead to decision delays.
• Opinions that are not multidimensional may miss important aspects.
• Risk of abuse of power.
• Not suitable in situations that require quick decisions, concentration of power and decisions from one individual or small group.

Note: Specific situations will require flexibility in applying this model to ensure appropriate applicability to the specific context and goals.

2.4. Decision-making model based on intuition

The intuitive decision-making support model for businesses is a quick and effective approach to the decision-making process, based on the administrator's intuition. Decisions can be made instantly without taking much time compared to other decision making models.

Advantage:

• Decisions are made quickly and flexibly.
• Decisions can be made without requiring too much time and resources.

Defect:

• Because it relies on intuition and instinct, decisions can carry higher risks.
• This model places high demands on the judgment and experience of the decision maker.
• Suitable in situations that require immediate decisions.

Note: The intuition-based decision-making model is very suitable for people who already have a lot of experience and knowledge in a specific field, but may not be suitable in situations that require thorough analysis, based on details.

2.5. Matrix-based decision making model

Another approach to evaluate and determine the best solution among possible options is to use the Pugh matrix. This is an effective decision-making method, especially useful when the team faces many similar options and needs to consider many factors before making a final decision, to avoid mistakes due to time pressure or crowd psychology. The Pugh matrix model helps teams have a comprehensive view of options and decisions based on responsible and detailed analysis.

3. Influencing factors when applying decision-making models

In the process of applying models, success or failure not only depends on accuracy but is also influenced by many different factors. Here are the factors that influence decision making:

3.1. Dominated by emotions

Emotions dominate decisions, causing the brain to function unstable. The brain is divided into two information processing machines: one side processes information logically and patiently, while the other side processes immediate feelings and desires. It is worth noting that the sensing brain often dominates the logical apparatus for making decisions. Therefore, using the decision model should be done in a calm and stable mood to avoid being influenced by emotions.

3.2. Ignore unpleasant information

The effect describes the intentional ignoring of unpleasant information during the decision-making process. Decision-makers often avoid information that they think will make their work or life difficult or ineffective, although there are many models that can be applied. A real-life example is when many people avoid looking at bills because they worry about paying late.

In the investment industry, SSRN's research shows that investors often check portfolio value less when the market is correcting or falling, but increase trading when the market is rising.

3.3. Fall into the halo effect

Falling into the halo effect is a situation when assessments and decisions are based on general impressions and social status. This effect often leads to quicker decision making than necessary, especially during the hiring process. To minimize the halo effect, many teams have applied a multi-round structured interview method, using numbers and competency results to help employers limit bias and make decisions wisely. more mature.

3.4. Crowd mentality

Crowd mentality, or "the wind falls in every direction" is a phenomenon that occurs when information from the group is considered more important than individual information. In this situation, team members often trust and follow the common trend, mainly to feel secure in the consensus of the crowd. However, they may forget about the detailed analysis process to ensure that the final decision meets the specific goals and requirements of the project or job.

Choosing the right decision-making model is an important part of business success. In the above article, 1C Vietnam has provided useful information about decision-making models and influencing factors when applied. If you have any questions, please contact 1C Vietnam immediately for detailed advice.