The purpose of this report is to discuss the usefulness of different contextual factors in managerial decisions of an organization with the help of literature analysis. Decision making is considered as a vital component for the success of any business. The decisions that are based on the foundation of sound reasoning and knowledge could lead any organization into long term prosperity. Organization’s decision makers have to make themselves familiar with different contextual factors. The first one is organizational structure or governance that helps in formulating the governing policies and standards of the organization. It outlines the way how the activities of the organization are directed to achieve its goals. Secondly, environmental forces are another external factors that could have impact on the business. Risks confronting the firm are important to be identified so that its adverse effects could be mitigated by the organization. The organization and business practices are the main processes that signifies the organization’s culture. The last contextual factor is function of diverse firms which is significant in terms of improving the business potential to make decisions by taking into consideration varied views on a particular matter.
Organizational structure or governance
Rosenberg & Keller (2016) aimed at understanding that how the employees of the organization make sense of a structural change in an organization. The author claimed that the effectiveness of decision making depends on the organizational structure. The study findings have shown that the two main practices that shaped the structural change process within the organization are sharing of information with employees and the structural reorganization.
These findings are significant for the managers of the organization in terms of making them understand that a formalized organization structure is highly responsible for affecting the quality of business information that ultimately improves the decision making capability of the organization.
Jia & Mo (2017) claimed that decision making behavior of an organization is heavily influenced by external environmental factors. The main focus of this study is the impact of environmental forces on the software projects of the company. These forces include project manager’s autonomy, client involvement, interactive planning, attitude of team members and technical potential of project team. The findings of the study have shown that environmental forces within the organizational context helps in better understanding the decision making process of the company.
These findings are significant for the managers of the organization in terms of improving their ability of decision making that helps them to identify the best practices for organizational success by taking into consideration the environmental forces.
Risks confronting the firm
Brookfield (2018) explored how risk management of the organization helps in enhancing the organizational performance. The focus of this study is mainly on the economic risks that could have direct impact on the revenue generation of the company. Also, the author discussed about the accounting system that represents a collection of process that supports broader level of organizational activities. The findings of the study claimed that accounting system is an important context within the organization that not only helps in minimizing the tax liabilities, rather helps in transmitting and receiving information and shape up the entire organization to deal with the risks. These findings are significant for the managers in understanding the concept that how the business activities within the organization have a direct impact on each other and how they are related.
Organization and business practices
Cameron & Mora (2011) studied the effect of positive organizational practices on the organizational effectiveness. For studying this contextual factor, the author focused on two different studies; one in the finance sector and other in the healthcare industry. The findings of the study claimed that positive business practices help in predicting organizational performance. Also, improving the organizational practices has a positive impact on the employees and working environment of the organization.
These findings are highly significant for the managers of the organization in terms of improving business practices to have improvement in certain indicators of business effectiveness over time. It would help the managers in developing the capabilities and skills that would help them in overcoming the issues associated with decreased business performance and productivity.
The functions of diverse firm
Andrevski & Richard (2014) examined the mediating role of business competency in maintaining the relationship between firm performance as well as the managerial racial diversity. The author claimed that racial diversity is directly related to the performance of the organization through its capacity to compete with other organizations. The findings of this study have shown that racially diverse groups within an organization compete more intensively by performing better when they work in munificent environments.
These findings of the author are highly significant for the managers of the organization in terms of building potential and capabilities to interact and communicate effectively with the diverse groups within an organizational context for increasing organization’s performance and efficiency.
Overall, it could be concluded that the consideration of all the above context factors are significant for the management of the organization in order to achieve their organizational goals. A formalized organizational structure is highly responsible for affecting the quality of business information and decision making process. The best practices by the mangers of the organization could be identified by taking into consideration the environmental forces. Assessing the risks of the company is important in terms of overcoming the challenges of business performance and decision making. Also, it has been found that by improving business practices, improvement in certain indicators of business effectiveness over time could also be achieved. Lastly, the diversity in an organization is important in improving the business potential to make decisions by taking into consideration varied views on a particular matter.
- Andrevski, G., & Richard, O. (2014). Racial Diversity and Firm Performance. Journal Of Management, 40(3), 820-844. doi: 10.1177/0149206311424318
- Brookfield, D. (2018). Risk and organizational effectiveness. Journal Of Organizational Effectiveness: People And Performance, 5(2), 110-123. doi: 10.1108/joepp-01-2018-0005
- Cameron, K., & Mora, C. (2011). Effects of Positive Practices on Organizational Effectiveness. The Journal Of Applied Behavioral Science, 47(3), 266-308. doi: 10.1177/0021886310395514
- Jia, J., & Mo, H. (2017). Grouping environmental factors influencing individual decision-making behavior in software projects: A cluster analysis. Journal Of Software: Evolution And Process, 30(1), e1913. doi: 10.1002/smr.1913
- Rosenberg, A., & Keller, M. (2016). Making sense of organizational structure change: a practice-based approach. Baltic Journal Of Management, 11(4), 452-472. doi: 10.1108/bjm-12-2015-0243