Question

The Government has recently launched a new and innovative transport system in the country, which is managed by the Metro Express Co Ltd. The CEO of the company is aware that a big challenge lies ahead in managing a new company and to run it efficiently. The Chairperson of the Board of Directors has stated, at the first meeting, that “Managing an organisation requires various skills and the ability to organise various resources. All these tasks must be executed with an understanding of how actions influence the organisation, both internally and externally.” Furthermore, the Board of Directors of the Metro Express Co Ltd has stressed that one of the significant influences on how an organisation is managed is the system of corporate governance. The CEO has been informed that you are enrolled for an MBA course and he has appointed you to advise him manage the company.

You are requested to advise him on:

(i) all the factors he must consider, including accounting information, to manage the decision making process of the company?

Answer 1

Success of any company is depended upon sound corporate governance. corporate governance is not about only structure but it consists duties, control, obligation and leadership of the company. Distribution of responsibility is vital for effective corporate governance in the company. This helps individuals in understanding and managing the requirements.

Some of the factors that must be considered for to manage the decision process making in the company-:

(i) Garnering quality inputs in terms adequate and accurate information is very much essential for decision making. This data includes Operational, business, logistical etc. Decision can only right if the underlying data is rational and correct. Fair transparent accounting information published by the management is covered in this factor. Internal controls in the Organization should be effective to provide fair and transparent information. Otherwise it won't be effective.

(ii) Individual preferences and prejudice leads to ineffective decisions. Decision made unanimous is more effective and and is less deceptive n nature. Hence biasness is also one of the important which creates hurdle in the overall decision making process.

(iii) Attitude in the time of risk and uncertainty -: Decision making is really a tough job when there are some uncertainty involved in the decision. Many times management wants to ignore big gains due to little risk involved in it. Calculated risk with higher returns can be taken by manager if the Organizational policy does not penalize manager in the case of failure of decision.

(iv) Personal habits of the leader's in the Organization. Sometimes top leadership is aware of the wrong decision and yet they don't reverse their decision out ego. This attitude is also one of the factor which makes decision making ineffective.

(v) Social influences also exerts influence in the process of decision making. Judgement of managements are depended upon the social norms in which the Organization operates. Individualistic decision making like America and group decision making like is used in Japan are best example to prove the significance of this factor.

If the top management while Decon making consider these factors and there is high chances of success for the Organization.