There are many different factors that influence an organisation on decision making (Padillo-Perez, j.m.1995, multiple criteria decision methodology) factors such as technological factors, environmental factors, political factors, competitor factors and employee factors which all have different goals and outcomes of the organisation. An example of this is when prices in a market are rising over time, which is an environmental factor, which has various effects on decision-making.
There are many accounting systems that are used by different organisations as no one organisation is exactly the same as another (Balakrishan, S.1994, The Dynamics of Decision Making) but these accounting systems have a similar objective in providing precise costs of products or service a organisation provides.
Whatever decision made on a project, throughout the stages of the process it is reluctant to change for with or without warning.
These decision models allow the organisation to examine investment decisions to move towards a choice were the organisation would feel comfortable in reaching their objectives or goals. From this, predictions can be made on various options related to the organisations objectives.
Relating to the decision model, organisations also need to know whether or not the company has any competitors, as this can bring changes to company’s overall performance, relating to quality of a good or service of the company and to be superior over the competitor. This can also help gain information for the company to work out or to see whether the company should engage in a certain product or service they can provide and will also bring about whether they would make or profit or not.
Logically from the information gained, it would be realistic to say that an organisation would want to make or provide service that makes a profit and would go ahead with the process of producing such product or service, but would think twice about a product that does not make a profit (Ellis, G, Solving Make-or-Buy Problems, Management Accounting) and would put an end to the production of the product or service an organisation provides. A company wouldn’t want to increase loses but too reduce its loses as much as possible otherwise there’s no point of business if there not going to make a profit. But again as I mentioned before there are many factors that influence decisions made and on the whole it is not a simple process to do so.
When management related to information from the past or of an existing product makes accounting decision with hardly any changes to social, environmental, political and other organisational concerns then this could lead to decisions being made that are not realistic and could have a negative output for some organisations or a positive output for other organisations based on the decision being made. The reason for this is as I mentioned before, that every organisation is different in their own little way, so a decision made for one company could have many advantages and benefits and for another company this could lead to disadvantages, again there are many factors related to the reasons behind this, such as the number of people working in one company can be far more than within another company and therefore they would have different organisational objectives and goals.
Decisions made by management related to accounting information changes from organisation to organisation. Some organisations tend to base their decision on a long term basis and some organisations base their decisions on a short term basis, again depending on what the organisation wishes to achieve.
I have concluded and gained knowledge from the research I have carried out that models of decision-making are more than likely to undertake a process of logical and a realistic alternative, but have also acknowledged the fact that it is a very complex issue and many factors can influence the decisions being made within the organisation. As I mentioned before every organisation is different, so no ‘one’ management accounting hypothesis is suitable for every organisation. Meaning an accounting structure is an element of a carefully planned system within the decision making process. Accounting basically assists management within an organisation no mater what size or what they provide as good or service, a way of building a foundation to make very imperative organisational decisions.