LOGIC: A PATHWAY TOWARDS BUSINESS SUCCESS

Overview:

This lesson focuses on how logic, in the form of critical thinking and decision making, can lead to
business success. It discusses the definition, characteristics, and significance of critical thinking and
decision making in the business setting. The discussion provides detailed information about the barriers
that affect critical thinking and decision making, as well as guidelines for critical thinking and decision
making for application purposes.

Objectives:

At the end, the learners will:

1. know the benefits of logic in business.

2. understand the importance of critical thinking and decision-making.

3. determine the barriers that affect critical thinking and decision-making.

4. realize the importance of applying logic in business

Concept Notes:
1.1 Definition

The term "critical thinking" is frequently used. You've likely heard it often over the years, whether in
casual conversation, at work, or in school. Yet, when you consider it, what precisely is critical thinking,
and how can you practice it? Critical thinking is careful data analysis to help you generate more
accurate conclusions and decisions. It involves making inferences and generally understanding things
better by applying concepts like logic, reasoning, and creativity. Critically speaking, this means using or
employing expert judgment or observation. Critical thinking in this context refers to clear-headed
reasoning. More specifically, "critical thinking" refers to a broad set of cognitive abilities and
intellectual attitudes required to successfully recognize, scrutinize, and assess assertions of truth and
reasoning. Also, it aids in identifying and overcoming personal biases and prejudices, developing and
presenting strong arguments in favor of conclusions, and coming to logical, informed decisions about
what to think and do.

But, it is not a given that being intelligent entails having the capacity for critical thought or being able to
use the information to reason effectively and efficiently. Being intelligent and smart is insufficient.
When assessing claims for scientific truth, critical thinking is a process or journey that aids us in
reaching the most practical, beneficial, and plausible destinations. As a result, critical thinking entails
thinking reasonably, rationally, objectively, and independently.

Ideally, it is a procedure that results in a fact- and data-based study that is objective and uninfluenced by
unrelated feelings. As a result, critical thinking aims to reach well-supported, well-considered
judgments. Criticocreative thinking is another name for critical thinking. Combining the terms "critical"
and "creative," we get this word. This is due to two interrelated factors. The first is that the phrase
"critical thinking" sometimes conjures up images of someone who solely cares about harshly criticizing
the claims and opinions of others.

There are a lot of definitions regarding what Critical Thinking is, and here are some of the takes:
● "Reasonable, introspective thinking centered on choosing what to believe or do," according to
Robert Ennis.
● Matthew Lipman said that "Creative, ethical thinking that supports sound judgment because it is
Self-correcting, dependent on criteria, and sensitive to context.
● Richard Paul once said, "Thinking about your thinking improves your thinking.
better"
● According to Linda Elder, "Critical thinking requires the capacity for
• Bring forward important issues and queries
• Compile and evaluate pertinent data
• Make good use of abstract concepts while interpreting data.
• Reach well-thought-out findings and solutions, evaluating them in light of pertinent standards or
criteria.
• Be open-minded while considering different schools of thought, identifying and evaluating their
assumptions, repercussions, and applications.

A comprehensive idea, critical thinking, can be portrayed in many different ways. Despite its
complexity, the Western tradition has strongly emphasized a few fundamental aspects of critical
thinking. These elements consist of the following:
• Emotional intelligence - The capacity to be intrigued, curious, and resilient in the face of boredom
and frustration. Humility, inquiry, and skepticism are three essential emotive abilities. Skepticism is the
rejection to support opinions based solely on speculation or without sufficient proof, whereas humility is
the readiness to acknowledge when one is mistaken. Curiosity is the desire to learn new things.
• Inferential ability - The capacity to infer conclusions from premises or supporting data and apply
persuasive techniques to give a position or theory a logical framework.
• Observational Ability - The capacity to detect and describe one's sensory facts is known as
observational ability.
• Questioning ability - The capacity to recognize the complexity of a situation and identify a problem
or a riddle that has to be solved.
• Creativity - The capacity to articulate numerous hypotheses, solutions, or analyses
• Consultation skills - The capacity to appropriately consult others for information
• The capacity to judge - determining the appropriate level of precision and generality to use when
framing a problem, applying concepts deftly, and determining how much confidence in a conclusion the
evidence supports

When faced with a dilemma or decision, it's crucial to ask questions before drawing conclusions to
improve your critical thinking skills. Start with easy questions like What do I already know? How do I
know this, and how? They help you gain a clearer understanding of the situation and, in certain
situations, may help to simplify more complicated problems. Several practical situations call for the use
of critical thinking. You can make wiser choices, increase your employability, and fully comprehend the
world around you.

1.2 Characteristics
A critical thinker is simply a person who demonstrates some essential quality of thinking. Every
important individual should exhibit certain tendencies, attitudes, aptitudes, skills, routines, and ideals.
We'll look at some of this part's critical thinkers' most important intellectual characteristics.

• Are truthful with themselves, admitting their ignorance, realizing their limitations, and keeping an eye
out for their own mistakes. It entails thinking about your thinking and is reflective, self-evaluative, and
self-improving

• See issues that cause conflict as fascinating challenges. It involves using sound judgment and thinking
critically about actual issues and questions.

• Make an effort to comprehend, maintain your interest, be patient with complexity, and be willing to
put in the time necessary to dispel confusion.

• Involves being reasonable. Correct reasoning principles must be implemented with consideration for
the situation, objectives, and available resources. Base decisions on facts rather than personal
preferences, deferring to facts whenever necessary. When new information reveals bias, they change
their conclusions.

• Have an interest in the opinions of others, which leads them to read and pay close attention to
others—even when they typically disagree with them.

• Responsive and governed by standards - Accuracy, relevance, clarity, breadth, and depth are some of
the criteria or standards of thinking. Avoid extreme viewpoints, practice fairness, and look for a
balanced perspective because they understand that extreme views (conservative or liberal) are rarely
correct.

• Learn to exercise discipline, to take charge of their emotions rather than allowing them to run their
lives. Integrity in the overall system entails dissecting one's cognitive process to evaluate it critically

Now let's contrast the main intellectual characteristics of critical thinkers with the pertinent
attributes of uncritical thinkers:

First, although uncritical thinkers frequently think in unclear, imprecise ways and lack in
other critical thinking criteria, critical thinkers have a passionate drive for clarity, precision, correctness,
and different standards. Additionally, critical thinkers are aware of the ways in which egocentrism,
sociocentrism, wishful thinking, and other obstacles might skew their judgments. In contrast, uncritical
thinkers frequently succumb to egocentrism, sociocentrism, relativistic thinking, erroneous assumptions,
and wishful thinking.

In contrast to uncritical thinkers, who frequently misunderstand or assess arguments and

opinions unfairly, critical thinkers are adept at comprehending, deconstructing, and evaluating
arguments and viewpoints. Furthermore, critical thinkers use logical reasoning to reach valid
conclusions from evidence and data, as opposed to uncritical thinkers who use illogical reasoning to
reach invalid findings from the same sources.

Second, while uncritical thinkers claim to know more than they do and overlook their
limitations, critical thinkers are intellectually honest with themselves, admitting what they don't know
and understanding their limitations. Moreover, critical thinkers accept challenges to their views and
presumptions and listen to competing points of view with an open mind, in contrast to uncritical
thinkers who are closed-minded and fight challenges to their beliefs and presumptions.

Third, while uncritical thinkers frequently base ideas solely on personal preferences or
self-interests, critical thinkers frequently base opinions on facts and evidence rather than personal
preferences or self-interest. Once more, critical thinkers are conscious of the prejudices and
preconceptions that influence how they see the world, in contrast to uncritical thinkers who are unaware
of their prejudices and preconceptions.

Fourth, although uncritical thinkers prefer to engage in "groupthink," uncritically adhering to

the views and ideals of the crowd, critical thinkers think independently. They are not afraid to disagree
with group opinion. Moreover, critical thinkers accept challenges to their views and presumptions and
listen to competing points of view with an open mind, in contrast to uncritical thinkers who are
closed-minded and fight challenges to their beliefs and presumptions.

Fifth, although uncritical thinkers prefer to engage in "groupthink," uncritically adhering to the
views and ideals of the crowd, critical thinkers think independently. They are not afraid to disagree with
group opinion. Moreover, critical thinkers accept challenges to their views and presumptions and listen
to competing points of view with an open mind, in contrast to uncritical thinkers who are closed-minded
and fight challenges to their beliefs and presumptions. Also, critical thinkers have the intellectual
fortitude to confront and honestly evaluate ideas that contradict even their most fundamental views, in
contrast to uncritical thinkers who fear and avoid ideas that contradict their core convictions.
 Finally, and perhaps most significantly, critical thinkers pursue truth, are curious about a variety
of topics, and possess the intellectual fortitude to pursue insights or truths despite obstacles or
difficulties, in contrast to uncritical thinkers who are frequently relatively indifferent to truth, lack
curiosity, and tend to give up when faced with intellectual challenges.

1.3 Barriers to Critical Thinking

A variety of things can prevent critical thinking. Lack of pertinent background knowledge,
poor reading skills, bias, prejudice, superstition, egocentrism (self-centered thinking), sociocentrism
(group-centered thinking), peer pressure, conformism, provincialism (narrow, unsophisticated thinking),
closed-mindedness, distrust in reason, stereotyping, unwarranted assumptions, scapegoating (blaming
the innocent), rationalizability, and rationalization are some of the most frequent obstacles to critical
thinking (inventing excuses to avoid facing our real motives).

Let's take a closer look at five of these obstacles that prevent critical thinking particularly
effectively: egocentrism, sociocentrism, unfounded assumptions, relativistic thinking, and wishful
thinking.

1. EGOCENTRISM

Egocentrism is among the most effective obstacles to critical thinking. Egocentrism can affect
anyone, including those with advanced education and intelligence. The propensity to consider oneself as
the center of the universe is called egocentrism. Selfish, narcissistic individuals who think their
interests, viewpoints, and values are superior to those of others are known as egocentrics. Egocentric
biases affect all of us to some extent. Egocentrism can appear in many different forms. Self-interested
thinking and superiority bias are two examples of this.

2. SOCIOCENTRISM

Sociocentrism is the second potent obstacle that prevents most individuals, including
intellectuals, from exercising critical thought. It is oriented toward collaborative thinking. In the same
way that egocentrism can obstruct rational view by excessively emphasizing the self, sociocentrism can
do the same by emphasizing the group. Critical thinking can be distorted in many ways by
sociocentrism. The two most significant ones are conformism and group prejudice.
The inclination to believe that one's group—a nation, tribe, or peer group—is necessarily
superior to others is known as group prejudice. According to social scientists, this thinking has been
quite prevalent throughout human history and cultures. On the other hand, we find it simple to see
persons we consider to be "outsiders" with mistrust or dislike. Whereas conformism refers to our
propensity to follow the herd, that is, to adhere to the rules of authority or the norms of belief held by a
particular group. One of the most robust human drives is the need to fit in and be a part of the crowd.
This desire can potentially impair our capacity for critical thought and decision-making substantially.

3. Unwarranted Assumptions and Stereotypes

Unfounded presumptions and stereotypes are the third barrier to critical thinking. We take an
assumption for granted and that, in the absence of proof or convincing evidence, we presume to be true.
The majority of what we think and do predicate assumptions. We take an umbrella if the weather report
predicts rain because we believe the meteorologist is telling the truth, the information is based on a
scientific analysis of weather patterns, the instruments are reliable, etc. Even though there is no
confirmation that this is accurate, we understand that carrying an umbrella is better than demanding the
weather bureau thoroughly justify its forecast.

Stereotypes are among the most prevalent examples of unfounded assumptions. The term
stereotype dates back to the invention of the printing press when identical copies of a single page were
produced using plates or stereotypes. When we judge someone based not on their unique attributes but
rather on their affiliation with a particular group, we are thinking that all or nearly all of the members of
that group are similar. No matter their color or other commonalities, people are not all the same;
therefore, stereotypes about them are frequently untrue or deceptive.

4. Relativistic Thinking

Relativistic thinking is one of the biggest obstacles to critical thinking. Relativism holds that
one's perspective determines what is true. Subjectivism and cultural relativism are the two widely
used types of relativism. The idea of subjectivism has that each person's interpretation of the truth is
valid. According to subjectivism, there is no "objective" or "absolute" truth; instead, whatever a person
perceives to be true is true for that person only. Cultural relativism is another prevalent type of
relativism. This perspective holds that what is true depends on social or cultural opinion. The idea that
what is valid for person A is the same as what person A's culture or society considers true is known as
cultural relativism.
Moral relativism is by far the most prevalent type of relativism. Similar to relativism in general,
there are two main types of moral relativism: moral subjectivism and cultural, moral relativism. The
idea is that what is ethically proper and suitable for a person is moral subjectivism. Cultural moral
relativism, which holds that what is morally right and beneficial for an individual, is the second primary
type of moral relativism.
Relativism can instruct us on the importance of intellectual humility in this way. But, we do not
require relativism, a faulty and perplexing notion, to impart this knowledge to us. Simply by being
open-minded and critically analyzing the difficulties of leading an ethical life, we can learn it.

5. Wishful Thinking

Wishful thinking is the practice of holding an opinion purely out of want rather than on the basis
of solid facts. Do you ever engage in wishful thinking? If so, you're not the only one. Reason has
frequently lost conflicts with wishful thinking throughout human history. Humans create reassuring
stories to make the universe seem less hostile and unpredictable because they are afraid of the unknown.
They are terrified of dying and take the claims of healing gemstones, quackery treatments, and
mediumship with a grain of salt. They fantasize about having superhuman abilities and believe
unquestioningly in claims of psychic prediction and levitation.

Here are some organizational barriers to critical thinking in addition to the Five Obstacles
that Prevent Critical Thinking.

1. The tendency to shape evidence to support one's opinions.

2. Attribution bias, also known as self-serving bias, is the assumption that good things happen to
us because of internal factors, and bad things happen to us because of external factors, although
the opposite is true for others.

3. The error of believing information from someone else even when there is no supporting proof
is called "trusting testimonial evidence."

4. Memory lapses pose a threat because it's a common human inclination to fill in blanks with
the knowledge that may or may not be accurate.
 5. Unquestioning submission to authority - Blind acceptance of individuals with dubious
credentials or areas of expertise.

6. Generalizing from too few observations - Concentrating on a concept even though the views
of a particular set of people do not accurately reflect the opinions of the more significant
population

7. Ignorance and the refusal to acknowledge it are traits that encourage false information and
irrational speculation.

8. Coincidence (or the Law of Really Big Numbers) - The fallacy that some pieces of
information have causation when, in reality, they are the consequence of pure coincidence or the
law of enormous numbers.

1.4 Guidelines for Critical Thinking

Finding the best approach to an issue is easier said than done. According to a recent article, emotions
influence more than 80% of human decisions, which may lead to hasty solutions. Yet, because not all
viable alternatives were taken into account, it occasionally resulted in impulsive or irrational decisions
that prevented decision-makers from reaching the ideal outcome.

Dr. Rafiq Elmansy stated that the process of critical thinking tends to help us judge and evaluate
situations based on understanding the related data, analyzing it, developing a clear understanding of the
problem, selecting the appropriate solution, and taking actions based on the established solution. From
this, it can be concluded that people should start resorting more to logic as it is useful in making
complex decisions. Thus, the following are guidelines for critical thinking that were suggested by Dr.
Rafiq Elmansy and Bruce Reichenbach.

STEP 1: KNOWLEDGE - identifying the argument or issue that must be resolved by raising questions
such as:
· What is the problem?
· Why is this happening?
· Why do we need to solve it?
STEP 2: COMPREHENSION - Understanding the situation and the relevant facts by gathering
information about the issue using any applicable research methodology.
STEP 3: APPLICATION - utilizing mind maps to establish a connection between the facts and
resources to fully comprehend the various facts and resources needed to solve the problem.
STEP 4: ANALYSIS - Evaluating the issue to determine the situation, the strong points, the weak
points, and the problems faced when fixing the problem. Clarify the order, link, or relationship between
the ideas by breaking them up into their component elements.
STEP 5: SYNTHESIS - Deciding on a solution to the issue and the initial steps to take to put that
solution into practice. In the event that there are several options, those should be evaluated and analyzed
to determine which is the best. The SWOT analysis, which tends to pinpoint the solution's strengths,
weaknesses, opportunities, and threats, is one of the methods that contributes to determining the
problem solution.
STEP 6: TAKE ACTION / EVALUATION - Developing a realistic evaluation of the issue. In order to
determine whether or not one can offer or withhold belief and whether or not to adopt a specific action,
one must evaluate the information that has been understood, analyzed, and synthesized.

1.5 Importance of Critical Thinking

1.6 Critical Thinking in Business Setting

Christopher Neck cited the Current Directions in Psychological Science article in his book,
Organizational Behavior: A Critical-Thinking Approach, with Jeffrey Houghton and Emma Murray. The
article stated that cognitive ability tests, including critical-thinking tests, are among the strongest and
most consistent predictors of performance across both educational and professional settings, proving the
indisputable effectiveness of critical thinking in the workplace.

Indeed, most businesses today place a strong emphasis on data-driven decision-making because critical
thinking:
● Helps business leaders make well-informed decisions because it enables them to take a balanced
view of situations and consider all available options before making a choice.
● Encourages employees to come up with innovative ideas and suggestions that can be very
helpful to business management.
● Ensures unbiased and effective problem-solving.
● Lowers costly mistakes and ensures that an organization's resources are used effectively.
● Aids in the analysis, evaluation, and integration of strategic decision-making in daily operations
so that administrators can effectively defend ideas, assess the viability of recommendations, and
find the best solutions for successful outcomes.
● Guides leaders and employees toward making critical decisions in an effective manner.
● Creates a channel for productive communication between leaders and employees.
● Permits one to adopt fresh viewpoints on circumstances and difficulties encountered at work.
● Aids entrepreneurs and managers in taking into account the intended and unintended effects of
their actions on their teams, organizations, and communities.
1.1 Definition of Decision-Making

Making decisions is an essential part of everyday life. Countless decisions are made by people every
single day. Most are relatively inconsequential like deciding whether what to wear, what to eat and drink
and where to travel. Some are more complex to decide, like choosing what job to apply for, what course
to take, and what to do in a particular situation. These decisions can have a great impact in one's life and
thus, it is important to know how to choose the best action. But before anything else, let's define
decision-making.

Decision-making is a compound term for decision and making. The word decision originally comes
from the Latin word decidere ("determine") which literally means "to cut off". It is the act of eliminating
the possibilities and other options, and by doing the action quickly without hesitation. Making, on the
other hand, refers to the act of creating and producing something. To put these words together,
decision-making is the process of making choices through the identification of a decision, the gathering
of information, and the evaluation of alternative resolutions. Decision-making is a series of steps taken
by an individual to determine the best option or course of action to meet their needs. It involves critical
thinking, analysis of situations, and consideration of the possible outcomes and consequences.
Some are the other key definitions of decision-making:

"Decision-making is the selection based on some criteria from two or more possible alternatives."
-—George R.Terry

"A decision can be defined as a course of action consciously chosen from available alternatives for the
purpose of desired result" —J.L. Massie

"A decision is an act of choice, wherein an executive forms a conclusion about what must be done in a
given situation. A decision represents a course of behavior chosen from a number of possible
alternatives." -—D.E. Mc. Farland

“Decision making is the blend of thinking, deciding and acting.” —- Franklin G. Moore

"Decision making takes place in adopting objectives and choosing the means, and again when a change
in the situation creates a necessity for adjustments." —-Mary Cushing Nites

From these definitions, it is clear that decision-making is concerned with choosing a course of action
from among alternatives in order to achieve a predetermined goal. In business, decisions are made at all
stages of a venture step. Decisions govern all managerial functions, including planning, organizing,
staffing, directing, co-ordinating, and controlling. Thus, decision-making is at the heart of managerial
activities in an organization.

1.2 Characteristics of Decision-Making

1. Rational Thinking

It is always based on logic. Since the human brain has the ability to learn, the ability to remember and
relate many complex factors allows for rationality.

2. Process

It is the procedure that is followed by deliberations and reasoning.

3. Selective
It is selective in the sense that it selects the best course of action from among alternatives. To put it
another way, the decision process entails selecting the best course of action from among the available
options. The courses chosen by the decision-maker.

4. Purposive

It is usually purposeful, referring to the end goal. A problem solution provides an answer. The most
efficient path to the desired goal or end.

5. Positive

Although most decisions are positive, certain decisions may be negative, and it could simply be a
decision not to decide. Chester I. Bernard-Smith, one of the pioneers in Management Thought-who
observed, emphasized the importance of a negative decision, "The fine art of executive decision consists
in not deciding questions that are not now pertinent, in not deciding prematurely, in not making
decisions that cannot be made effective, and in not making decisions that others should make."

6. Commitment

Every decision is based on the concept of commitment. In other words, management is committed to
every decision it makes for two reasons: (I) it promotes the stability of the company, and (II) every
decision made becomes part of the expectations of the people who work for it.

Decisions are usually so intertwined with an enterprise's organizational life that any change in one area
of activity may also affect the others. As a result, the Manager is committed to decisions not only from
the time they are made but also until they are successfully implemented.

7. Evaluation

Decision-making involves evaluation of the alternatives.

1.3 Barriers in Decision-Making

1. Bounded Rationality is the belief that confronting complex issues that leaders do not fully
comprehend makes them unable to be rational about the situation and, as a result, incapable of
understanding an alternative.

2. Escalation of Commitment is the idea that leaders and managers remain committed to a poor decision
or find it difficult to rationally remove themselves from a poor decision[5]. It is hard for a leader to
accept "being wrong," but it is part of the learning process. Mistakes, critiquing, and revising are all part
of a divergent learning process in modern learning organizations. As a result, it is acceptable to make a
poor decision, but there are tools in place to assist a learner in developing new skills to overcome
previous mistakes, eventually removing the challenge of escalation.

3. Time Constraints is when there is little time to gather information rationally and make an effective
decision.

For example, a university wishes to launch a new web tool for students that other organizations have
completed, time is of the essence, so the tool is launched without fully comprehending all of the
information required. The web tool eventually releases with numerous bugs that must be fixed right
away. Although some situations are beyond the control of leaders, effective planning, forecasting, and
time management can help to alleviate time constraints.

4. Uncertainty is the state of not knowing an outcome until it occurs and is linked to the belief that an
outcome can be imagined but not seen. It is unclear how to manifest learning in prospective students
within a learning organization. Leaders can only use a methodology that allows the learner to absorb the
most information. A desired outcome can be imagined, but the uncertainty prevents seeing it until after
the decision has been made.

5. Biases in decision-making adhere to the idea that the choice is closely linked to ingrained beliefs and
worldviews. Also, it strengthens ideas that are comparable to our own beliefs. Usually, we make and
follow our own decisions. The notion that we give views that don't align with our worldview less
attention and instead focus more on our initial ideas is known as confirmation bias.

Leaders' own confirmation can influence how they work within organizations and have a negative
impact on those who do not share their exact worldviews. Being knowledgeable and sympathetic about
a contrary idea is one way to avoid bias. Leaders may make decisions based on personal worldviews,
but if they recognize that they are biased and can work with incorporating opposing viewpoints for a
more collaborative decision-making process, such influences can be avoided.

6. Conflict within an organization can be classified into two types:

Process conflict - disagreement about the best way to find a solution, while others seek alternative
solutions.

Relationship Conflict - a more personal conflict between individuals, involving attacks on character
rather than ideas.

Regardless of the nature of the conflict, it is best to resolve it as soon as possible.

1.4 Guidelines for Decision-Making

In his study relating to decision-making, Eizenfuhr (2011) highlighted that decision making is
the theoretical process of selecting one option from a variety of options in order to achieve a desired
outcome. Numerous academic fields, including statistics (Stine et al., 2011), to economics (Stolyarov et
al., 2019), to psychology (Beach & Connolly, 2005) roughly studied strategies in decision-making.
Pursuant to the fact that decision-making processes are applicable to a wide range of contexts, such as
the medical, political-economic, organizational, and business industries, the implications of these
studies for practice are crucial.

Decision making is just what it sounds like: the action or process of making decisions.
Sometimes we make logical decisions, but there are many times when we make emotional, irrational,
and confusing choices (Clear, 2022). As stated in an article published in October of 2021 written by an
American Marketing Consultant, in his perspective as a consultant, decision-making is the process
which enables people to make a decision between two or more alternatives. The outcome of each
alternative is associated with an expected value and a certain degree of uncertainty. Due to this
uncertainty, the decision-making process requires great attention in evaluating the alternatives.

Effective executives do not make a great many decisions. They focus on the important things.
They know when a decision should be based on the merits of the case and when it should be made
pragmatically. This means that the action commitment should be as close as possible to the capabilities
of the people who will be carrying it out, even though the effective decision itself is based on the highest
level of conceptual understanding. Executives who are successful first and foremost are aware that there
is a distinct systematic process and clearly defined components to decision-making (Drucker, 1967).
Every decision is a risk-taking judgement. Therefore, in an article published by Harvard Business
Review, a magazine retrieved in 1967 written by an Austrian-American Consultant Peter F. Drucker
shall describe the sequence of steps involved in the decision-making process.

1. Classifying the problem. Is it generic? Is it exceptional and unique? Or is it the first manifestation of
a new genus for which a rule has yet to be developed?
The generic always has to be answered through a rule, a principle. But the truly exceptional event can
only be handled as such and as it comes.

2. Defining the problem. What are we dealing with?

As Robert Duncan explains in his work, Characteristics of organizational environments and perceived
environment uncertainty published in 1972 by Administrative Science Quarterly, a decision maker seeks
information to reduce or eliminate risk (uncertainty). Questions such as these are familiar. But only the
truly effective decision makers are aware that the danger in this step is not the wrong definition; it is the
plausible but incomplete one.

3. Specifying the answer to the problem. What are the “boundary conditions”?
“Can our needs be satisfied,” Alfred P. Sloan, Jr. presumably asked himself when he took command of
General Motors in 1922, “by removing the autonomy of our division heads?” What are the objectives
the decision has to reach? What are the minimum goals it has to attain? What are the conditions it has to
satisfy? In science these are known as “boundary conditions.” A decision, to be effective, needs to
satisfy the boundary conditions.

4. Deciding what is “right,” rather than what is acceptable, in order to meet the boundary conditions..
What will fully satisfy the specifications before attention is given to the compromises, adaptations, and
concessions needed to make the decision acceptable? Decision-makers have to start out with what is
“right” rather than what is acceptable precisely because a compromise is always necessary in the end.

5. Building into the decision the action to carry it out. What does the action commitment have to be?
Who has to know about it?
The fifth important step in the decision-making process is putting the decision into action. Converting a
decision into effective action typically takes the most time, despite the fact that considering the
boundary conditions is the most challenging decision-making step. However, unless the commitments to
take action are incorporated into the decision from the beginning, it will not be effective. In point of
fact, no decision has been made unless carrying it out in particular steps has become a person's job
assignment and responsibility.

6. Testing the validity and effectiveness of the decision against the actual course of events. How is the
decision being carried out? Are the assumptions on which it is based appropriate or obsolete?
Finally, the decision must incorporate information monitoring and reporting to ensure that the
expectations underlying the decisions are continuously tested against actual events. Individuals make
decisions. People make mistakes; Their works, at best, only last a short time. There is a high probability
that even the best decision will be wrong. In time, even the most efficient one will become obsolete.

7 Steps to Effective Decision-Making. Photo taken from UMass Dartmouth.

In addition to that, another model has been incorporated with an easier one to ponder out the
nature of decision-making on a typical day-to-day basis. According to the two experienced business
managers and educators Phil Higson and Anthony Sturgess, who published Uncommon leadership: how
to build competitive advantage by thinking differently in 2014, the decision-making process can be
divided into 7 steps.

A structured decision-making model, based on a rationalistic approach, can be made by 7 steps:

1. Identify the decision. The first step is realizing what decision you need to make and its nature;
2. Gather information. Get relevant information and insights about your decision: what’s relevant
and what’s not? Who can influence the final event?;
3. Identify the alternatives. What different courses of action do you have? What different data
interpretations may be possible?;
4. Weight the evidence. Based on the intel you have, list the pros and cons of each alternative and
imagine its final outcome. Then, order the alternatives according your specific value system;
5. Choose among alternatives;
6. Take action.
7. Review the decision and its consequences. Has the outcome satisfied the need in step one? You
may want to review the previous steps and acquire more info on your options, add additional
details and explore other alternatives.

The Seven-step process is an illustration of a rational decision-making model. It starts with identifying a
problem or opportunity and ends with actions taken based on guided decisions, bringing logic and order
to decision-making.

1.5 Importance of Decision-Making

 Importance of Decision Making in Business. Photo retrieved from CareerCliff.
It is important to be able to make good decisions quickly in all situations. Decision-making is an
essential function. An ability to make decisions is essential because management is essentially a bundle
of the decision-making process. Therefore, here is some additional proof that justifies the need of
decision-making in business or any other organization setting.

Ensures Continuity of Organization/Business

Every organization needs to make the right choice urgently, and making the wrong choice could have
negative repercussions. The production, marketing, sales, and various expansion plans of a business
necessitate a variety of decisions. By making the right choices, the decision-making process aids
businesses in competing with the competition.

Fuller Utilisation of Resources

For an organization to achieve its goals and objectives, it must make effective use of all of its resources.
All of these resources should be used effectively without being wasted. Through effective
decision-making, managers are able to correct how these resources are used. It enhances productivity by
ensuring that all resources are utilized to their full potential.
Facilitates Innovation
Every business must implement innovation in response to changes in the market. Innovation is made
easier by making the right decisions. Every organization benefits from innovation in the form of new
products, procedures, and concepts. Proper planning and decision-making are necessary for putting
these changes into effect. Management's rational decisions make it easier to implement these novel
ideas.

Evaluates Performance
Every management team is primarily responsible for making decisions. The quality of management is
determined by the number of correct decisions made by managers. The degree to which managers are
carrying out their responsibilities and roles is evident from the effectiveness of their decisions. When
bad decisions are made, it is easy to see how poorly management is doing their job. This way,
decision-making aids in assessing management team performance.

Helps in Business Growth

Making decisions quickly and rationally contributes to an increase in business productivity and
efficiency. It helps make use of resources more fully and effectively. Better decision-making makes it
easier for the business to deal with market issues and challenges. All of these eventually result in the
achievement of business objectives and support business expansion.

1.6 Decision-Making in Business Setting

An individual's decision-making process is a series of steps they take to choose the best option
or course of action that best suits their needs. It is a set of actions taken by a company's managers to
determine the planned course of business initiatives and to initiate specific actions in a business context.
Every level of a business is involved in decision-making, from small mundane decisions, day-to-day
decisions made by lower-level employees to big, long-term decisions made by executives which may
require years of deliberation. A company's success depends on its ability to make decisions, big and
small. The need to solve a problem or the need to take advantage of a potential opportunity drives
decisions. In order to make well-informed decisions, it is essential to gather the appropriate amount of
information and input from key stakeholders. If you follow one of the few established methods for
gathering information and objectively weighing the benefits and drawbacks of the data, you can avoid
making poor choices.
A company's success depends on its ability to make decisions, big and small. The need to solve a
problem or the need to take advantage of a potential opportunity drives decisions. In order to make
well-informed decisions, it is essential to gather the appropriate amount of information and input from
key stakeholders. If you follow one of the few established methods for gathering information and
objectively weighing the benefits and drawbacks of the data, you can avoid making poor choices. In the
personal and professional worlds, decision-making is an essential part of life. It necessitates making a
decision that will determine the outcome. As it enhances your leadership qualities and helps you qualify
for such a position, this is an acquired skill rather than an inherent one that is highly sought after in the
workplace. It is a sign of a good leader, so employers find it appealing.

Benefits of making decisions is a necessary skill. It can assist you in a number of work-related
situations. The following are a few advantages of making decisions:
● Saves Your Time & Money - By making quick choices, you can save more time, which is better.
Additionally, time is money for an organization. Losing money is equivalent to wasting time.
● Make Better Use of Resources - A process that lacks clarity ensures a longer and more
complicated path to the desired outcome. or even a disappointing outcome. Whether you're
building a yacht or making a decision, this is true. If you follow a tried-and-true procedure step
by step, you will make the most of your resources at the right time.
● Increases Productivity - The workforce's productivity will increase in a variety of ways if
management is skilled at and prompt in making decisions. One reason employees will be
motivated is because they know where the company is going. With the assurance that their
efforts will not be in vain, they will work. Second, the management team is certain that their
actions will guide their business in the right direction, so no time is wasted.
● Identify Opportunities - The key is to recognize them so that you can seize them one day.
● Prevents Conflict - Employee disagreements about which approach to a project or which idea is
best for your team can be avoided with good decision-making skills. When the management
makes quick and decisive decisions, conflict is avoided.
● Employees Get More Confident
Assessment:

I. MULTIPLE CHOICE

1. In order to determine whether or not one can offer or withhold belief and whether or not to adapt a
specific action, one must evaluate the information that has been understood, analyzed, and synthesized.

a. Application

b. Analysis

c. Synthesis

d. Take Action/Evaluation

2. It is always based on logic. Since the human brain has the ability to learn, the ability to remember and
relate many complex factors allows for rationality.

a. Critical Thinking

b. Rational Thinking

c. Decision Making

d. Relativistic Thinking

3. It is the process of making choices through the identification of a decision, the gathering of
information, and the evaluation of alternative decisions.

a. Critical Thinking

b. Characteristics of a Critical Thinker

c. Decision Making

d. Guidelines in Decision Making

4. Unfounded presumptions and stereotypes are the _______ barrier to critical thinking.

a. first

b. second

c. third

d. fourth

5. There is ______ probability that even the best decision will be wrong.

a. a high

b. a low

c. an undetermined

d. a zero

6. It involves making inferences and generally understanding things better by applying concepts like
logic, reasoning, and creativity.

a. Critical Thinking

b. Characteristics of a Critical Thinker

c. Decision-Making

d. Guidelines in Decision Making

7. According to him, decision-making is the blend of thinking, deciding, and acting.

a. George R. Terry

b. J.L. Massie

c. D.E. Mc. Farland

d. Franklin G. Moore
8. Which of the following statements is incorrect?

According to Linda Elder, "Critical thinking requires the capacity for

a. Bring forward important issues and queries

b. Make good use of abstract concepts while interpreting data.

c. Be close-minded and don't consider different schools of thought, identifying and evaluating their
assumptions, repercussions, and applications.

d. Reach well-thought-out findings and solutions, evaluating them in light of pertinent standards or
criteria.

9. Below are the characteristics of Decision Making, except

a. Appropriate

b. Purposive

c. Positive

d. Selective

10. The practice of holding an opinion purely out of want rather than on the basis of solid facts.

a. Relativistic Thinking

b. Sociocentrism

c. Wishful Thinking

d. Egocentrism

II. TRUE OR FALSE

1. The word decision originally comes from the Greek word 'decidere' which literally means "to cut off".

2. Most businesses today place a strong emphasis on data-driven decision-making because critical
thinking encourages employees to come up with uncreative ideas and suggestions that are useless to
business management.
3. Massie defined decision-making as the selection based on some criteria from two or more possible
alternatives.

4. A critical thinker is simply a person who demonstrates some essential quality of thinking.

5. Relationship Conflict is a more personal conflict between individuals, involving attacks on character
rather than ideas.

6. Linda Elder defines critical thinking as creative, ethical thinking that supports sound judgment
because it is self-correcting, dependent on criteria, and sensitive to context.

7. Decision-making is at the heart of managerial activities in an organization.

8. The first step in the guidelines for critical thinking that were suggested by Dr. Rafiq Elmansy and
Bruce Reichenbach is to understand the situation and the relevant facts by gathering information about
the issue using any applicable research methodology.

9. Self-serving bias is the assumption that good things happen to us because of internal factors, and bad
things happen to us because of external factors, although the opposite is true for others.

10. Management is committed to every decision it makes for two reasons:

I. it promotes the stability of the company, and

I. every decision made becomes part of the expectations of the people who work for it.

III. ESSAY

1. What attributes about you contribute to your ability to think critically and be the key to the success of
your business?

2. Everyday life involves making decisions, and occasionally we make poor choices that are
unavoidable. Identify a poor choice you've made. What correction did you make to make it right?
Summary of Terms:

● Analysis - a technique of dissecting a complex subject or material into smaller components in

order to comprehend it better.
● Application- the process of starting anything up.
● Bounded Rationality - a behavioral bias that develops when people try to satisfy their needs
rather than optimize their decisions.
● Creativity - the ability to move beyond conventional ways of thinking or doing and create
novel, creative ideas, methods, or items.
● Critical Thinking - refers to the careful examination of a set of data that allows an individual to
reach more reliable conclusions and decisions.
● Commitment - the trait of dedicating oneself to a subject or action
● Comprehension - understanding something, either actively or passively.
● Consultation Skills - technical expertise and personal traits that make you qualified to provide
business guidance
● Decision Making - selecting a belief or plan of action from among multiple potential alternative
possibilities through a cognitive process.
● Egocentrism - extreme self-interest or care for one's own benefit or wellbeing at the expense of
or without consideration for others.
● Emotional intelligence - the capacity to comprehend, control, and affect one's own emotions as
well as those of others.
● Evaluation - a methodical process of determining and evaluating the validity, value, and
significance of a subject using standards-based criteria.
● Inferential ability - the ability to interpret textual information and grasp its underlying
meaning.
● Knowledge - awareness of information or as practical abilities; acquaintance with things or
circumstances.
● Observational Ability - are the traits and skills related to your capacity to use one or more of
your senses to recognize, contemplate, comprehend, and remember your environment and the
elements included within them.
● Positive - exhibiting or reflecting affirmation, acceptance, or certainty.
● Process - a series of actions or steps taken to reach a specific goal.
● Process Conflict - Coworkers may differ about whether a decision will be decided by a
unanimous vote or by a single person.
● Purposive - having or inclined to achieve a deliberate goal or design.
● Questioning Ability - the ability to analyze ideas or circumstances and pose pertinent questions
about them.
● Rational Thinking - the capacity to derive sound conclusions from evidence, reasoning, and
data. In simple words, if your thoughts are founded on facts and not emotions, it is called
rational thinking.
● Relationship Conflict - a disagreement brought on by personality conflicts or unfavorable
emotional connections between two or more persons.
● Relativistic Thinking - the conviction that only the facts that a particular person or culture
happen to accept can be considered absolute.
● Selective - concerning or involving the process of choosing those that are most qualified or
appropriate.
● Sociocentrism - the propensity to view things mostly from the viewpoint of one's own social
group or society.
● Synthesis - creating a hypothesis or system through the fusion of ideas.
● Time Constraint - it identifies several elements that place time constraints on undertakings.
● Uncertainty - an absence of conviction regarding someone or something.
● Wishful Thinking - a mindset or conviction that something you want will happen even though it
is not likely to happen or is not possible.
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