Decision Models Essay Sample

Based on Nagraj Balakrishnan According to Balakrishnan (2017), a decision model is an intellectual template used to perceive, organize, and manage a particular business logic that determines the proper business decision. Decision models are helpful to business in the following ways. First, decision models play a significant role in the success of any given business entity. Good business decision models can attract many persons with a lot of interest in forming partnerships in businesses. Balakrishnan (2017) notes that many investors also look for sound business decision models to help them determine what business opportunities to exploit. Second, decision models help in predicting the performance of a company to determine whether the business will be profitable, remain constant, or lose. Third, business models address the type of products and services that a company offers for sale. The three common types of inputs common to decision models include raw materials, labor, and finance (Balakrishnan, 2017). A decision on the quality, quantity, and the right type of raw materials used in a company matters a lot to the success of the company. Good decision models help the firm realize the best and most suitable sources of raw materials. It makes the firm operate at its optimum capacity. According to Balakrishnan (2017), skills and experience of company workers can transform product or brand image and promote their sales. Third, finances are fundamental inputs that decision models aim to improve. The proper decision is required in determining what projects to invest the money. Careful investments reap bountiful profits for the business.

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Based on Berend Wierenga and Ralf Lans Wierenga and Lans (2017) define a decision model as a computer-based system where decision outcomes can be predicted while carrying out various business activities. These models enable entrepreneurs to understand the relationship between different business based problems and their possible control mechanisms through the use of business logic. According to Wierenga and Lans (2017), decision models have numerous applications in business. First, business models can be used to forecast future uncertainties in business thereby helping entrepreneurs make quality decisions to avoid them. Second, a good decision model promotes innovation of products and services because entrepreneurs can vividly link characterization of consumer needs and the prevailing problems. Third, decision models assist managers to make proper decisions while running business entities thereby lead to success in carrying out business (Wierenga, 2017). By the use of an appropriate decision model, managers can make quality decisions between two competitive business endeavors by selecting the best endeavor to undertake to increase profits and stabilize the brand. Three types of inputs are commonly used in decision models namely; capital, labor, and entrepreneurship. Capital is crucial for starting a new venture, running it, and growing it. It can also be in the form of machinery and buildings used in the production process. Labor is the manpower in the production process. According to Wierenga and Lans (2017), a well-trained labor force can greatly increase efficiency and effectiveness in the manufacturing process. Entrepreneurship is another input that is significant to the success of a business. Before creating any business, entrepreneurial skills and motivation are required if the business has to succeed.

References

Balakrishnan, N. R. (2017). Managerial Decision Modeling: Business Analytics with Spreadsheets, Fourth Edition. De|G Press.

Wierenga, B., & Lans, R.. (2017). Handbook of Marketing Decision Models.