Harvard Business School believes that the success or failure of a business largely depends on two major factors: decision-making and management, with the decision-making factor accounting for 80% and the management factor accounting for 20%.
The State Economic and Trade Commission has determined that the focus of enterprise management innovation should be placed in five aspects, with the first being decision-making management. Enterprises are required to establish a system of responsibility for major decisions. For violations of laws, regulations, and industrial policies that result in significant losses for the enterprise, the relevant personnel's responsibilities must be pursued.
Decision-making is the most important aspect among the three main contents of management methods. The three main contents of management methods are planning, control, and decision-making. Among these, plans can be revised iteratively, control is a process, but once a decision is implemented, it is difficult to change. Therefore, decision-making management must be approached with great caution. If an enterprise incurs losses, even if responsibilities can be identified, the losses cannot be recovered.
From the perspective of decision content, the primary areas are investment decisions and operational decisions. Relatively speaking, investment decisions carry greater risks and thus deserve more attention.
To strengthen decision-making management, all aspects and stages of decision-making must be controlled. Work should be done accordingly in terms of systems, institutions, and methods.
From a systemic perspective, a scientific decision-making procedure must be established. If it is an investment decision, one must go through industrial policy understanding, industry research, market research, and market forecasting to conduct a feasibility study. Then, an investment plan can be made, objectively calculating the return on investment. If it is an operational decision, several alternative plans should be ranked based on market studies.
From an institutional perspective, a specialized investment review body should be established, comprising members with various professional knowledge and operational experience, such as in business management, finance and accounting, engineering technology, and legal expertise. Investment review project materials must be delivered to reviewers in advance, allowing them sufficient time for research so that they can engage in thorough discussions during meetings. Currently, the National Securities Regulatory Commission has explicitly stipulated in its guidance opinions on the code of conduct for listed companies that the board of directors must establish an investment review body to ensure that investment projects undergo the review process.
In terms of methods, decision-making management includes many qualitative and quantitative measures. More sophisticated methods generally require the establishment of mathematical models, using linear programming, matrices, mathematical statistics, probability theory, and other methods for quantitative analysis, comparison, and selection. Additionally, some commonly used methods can be chosen, such as using decision trees for intuitive judgment and decision-making. Since the basis for decision-making is not always absolute, subjective experience-based judgments may sometimes be necessary, but the entire decision-making foundation remains objective.
Decision-making is a comprehensive and systematic science. For example, when selecting a location for a business, it involves geography, geology, and history. Therefore, widely listening to opinions from all sides is entirely necessary. Decision-making is also a complex discipline that requires both decisiveness and careful deliberation. Thus, listening to the views of people from different age groups is quite advisable.
Just as there are no generals who win every battle, it is unrealistic for every decision made by a company to be correct. However, once a decision is confirmed to be inappropriate or even wrong, it should be corrected or changed as soon as possible. At this point, new decisions should be made based on the current situation, rather than letting things progress unchecked due to concerns about losing face, which could lead to irreparable situations where it becomes impossible to recover.
If conditions permit, it might be better to extend the time for making decisions rather than rush into immature ones. Moreover, frequent changes in decisions should be avoided, as overly frequent decisions can be worse than having no decisions at all.
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Production Strategy Formulation - Process for Developing Production Operation Management Strategies_8254