ACCOUNT ING IN A NUTSHELL 5
Accountingin a Nutshell
Inall businesses, alternatives always arise since it is not possible toidentify which of the existing options should be utilized in thefirms’ decision-making process. Additionally, key elements may notbe considered as part of the procedure (Walker,2009).To avoid such instances, critical thinking is integrated into thedecision-making process to ensure that the appropriate alternativesare selected.
Thereare seven primary phases of the decision-making process in anorganization (Adair,2013).First, a consistent methodology can be used in the verification ofthe larger sections of the discriminating components that arenecessary for the success of a business organization (Kallet,2014).By adhering to the standard procedures, the probability of error issignificantly diminished (Walker,2009).Choices have a varying degree of influence on individuals andbusiness processes, and as such, it is necessary to evaluate theexpected outcomes and ways in which adverse results can be obtainedby a business organization (Kallet,2014).The decision to choose from various alternatives will depend on othersupportive variables that are considered to be key to thedecision-making process (Adair,2013).Stakeholder Analysis should be conducted to determine the mostappropriate choice of a decision-making process. It will alsodetermine those to be included in the procedure and the advantagesthat they will bring (Kallet,2014).
Verificationof the existing alternatives is the second stage of thedecision-making process (Walker,2009).One has to consider the circumstances under which the choice has tobe made before embarking on the selection of the most appropriatealternative (Adair,2013).This is to avoid conflicts that may arise from utilizing numerousinterrelated elements in the process (Adair,2013).Alterations that have been made in one section may influence theoperations of another area thereby inhibiting expected growth. Thephases proceed to the creation of alternatives from the choices thathave been analyzed and evaluated. A relatively larger pool of optionswill provide an extensive conclusion on the most efficient solutionto a business problem (Adair,2013).This is a complicated process since at the beginning the existenceof numerous alternatives may be appalling to individuals involved inthe operations of the firm.
However,the options of power with regards to thinking will enable one toreason creatively and analyze the issue from various angles (Kallet,2014).Exploration of the alternatives is also a core component of theprocedure. After identifying the existing choices and ascertainingtheir viability, the activity proceeds to the exploration of thecurrent alternatives. It is at this stage that potential dangers andsolutions are determined (Adair,2013).Risk Analysis is used to ensure that there is no bias in theoperations. It also assesses threats and the possibility of adverseeffects being experienced (Adair,2013).A probability chart is therefore used to determine risks and identifycorrective measures that are deemed necessary. It also ensures thatmore emphasis is laid on the risks with higher probability (Kallet,2014).
Afterthat, a choice is made from the existing alternatives. The decisionis based on a comparison analysis of the current options beforeproceeding to the identification of a conclusive choice (Adair,2013).The decision will be based on which of the solutions is best-suitedto the needs of the organizations (Adair,2013).The superiority of the selected option must be evident before a finaldecision is made. However, such a decision is usually complicated bythe existence of contending alternatives thereby making it relativelydifficult to select the most appropriate choice outright (Adair,2013).This calls for the use of a Decision Matrix to conduct a thorough andconclusive analysis of the alternatives. A direct Paired ComparisonAnalysis can also be utilized to establish the desirable selectionbased on the weight of the individual choices. Alternatively, ChoiceTrees play a massive role in determining distinctive budgetarydecisions. The benefit of the latter technique is that it highlightsthe probability of success and failure through the identification ofmethodology.
Atthis stage, the resources should be utilized in the assessment andselection of options (Adair,2013).The progress needs to be evaluated adequately to determine a “sensecheck” of choice made earlier. Therefore, it is recommended to havean insight into the past to monitor the progress of the decisionprocess (Kallet,2014).Before actualizing on any given choice, it is advised that one takesan unbiased look at the alternatives and ensure that the analysis hasbeen exhaustive and that all the existing blunders have beenidentified and eliminated (Kallet,2014).
Someof the final stages in the decision-making process relates to thecommunication of the decision to the stakeholders that were part ofthe process. The communication should be aimed at ensuring that theinformation has clarity and focus (Kallet,2014).Everyone should be influenced by the decision that has been made.This can be achieved by having them included in the arrangementsrelating to the choice that has been made. To garner additionalsupport for the decision that has been made, more data about dangersand anticipated profits should be provided to the stakeholders(Kallet,2014).
Adair,J. E. (2013). Decisionmaking and problem solving strategies.Philadelphia, PA: Kogan Page Ltd.
Kallet,M. (2014). Thinksmarter: Critical thinking to improve problem-solving anddecision-making skills.Hoboken, New Jersey: Wiley.
Walker,J. (2009). Accountingin a nutshell: Accounting for the non-specialist.Amsterdam: Elsevier/CIMA.