How Financial Strength of an Organization Influences Decision-Making and Outcomes

Decision Making and Uncertainty
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Decision Making and Uncertainty
Organizational decision-making is an important part of organization management and it impacts the overall performance of an organization. However, it relies heavily on the quality and type of information available to the decision-makers. One of the most important types of information that is relevant to organizational decision-making is financial information. Financial information reveals the financial strength of an organization and this influences decision-making in a couple of areas.
First, the financial strength of an organization influences the expansion decisions of an organization. Organizations are constantly making decisions on how to expand their business and these strategic decisions should match the organization’s financial strength. Yu (2021) refers to this as the internal matching principle of strategic decision making whereby the quality and success of an organization’s decision is dependent on its actual financial strength and other internal resources. An organization cannot m...