Strategic Decision-Making In Digital Economy: Challenges And Theories

Theories of Decision-Making in Digital Economy

Modern business is technology oriented and digitalization is a vital part of the business. Digital is not the part of an economy however, it is an economy. This economy offers limitless opportunities to the organization to improve their customer satisfaction level (Kane et al., 2015). No transformation in the business is a big problem to satisfy the customers. However, digital technologies allow the organization to establish a better engagement with their customers. Therefore, they can offer superior experience at low cost. However, often strategic decision-making in digital economy develops various issues, which hamper the effectiveness of digital economy. This study deals with the strategic decision-making in digital economy.

One of the major theories of decision-making is the prospect theory. This theory highlights the way through which the people take their decision. According to this theory, people always take a risk while taking a strategic decision (V?t?m?nescu, Nistoreanu & Mitan, 2017). It is important for people to take challenges during their decision-making. However, strategic decision-making in the digital economy is associated with risk. However, several challenges occur when an organization is going to take strategic decision-making in digital economy.

Satisficing theory is another vital theory of decision-making. This theory highlights that the decision-maker has the intellectual ability to take a decision within the limited time and limited information (Keegan & Rowley, 2017). This theory will be helpful for the decision-maker while making a strategic decision in digital economy. However, this theory is effective to enhance the ability of the decision-maker to take right strategic decision during the crisis.

In order to increase the delivery of the customer service, many business organizations have been using digital channels to enhance the customer experience in their organization (Nudurupati, Tebboune & Hardman, 2016). On the other hand, digital channel helps the organization to enhance their customer engagement. By creating a mobile app is a vital decision-making process to boost the customer engagement. However, it is important for the business organization to take proper strategy to improve their customer engagement. However, various issues occur that affect the strategic decision-making in a digital economy. The issues are as follow:

The behavior of the customer is changing rapidly. In the recent years, individuals try to interact with an organization by using different types of devices. Various communication channels are used by the organization to interact with the customers. Digitalization enables the organization to allow the customers to interact with the organization at different times in a day. On the other hand, the customer has the expectation that the organization should deliver a high level of consistent and cross-channel service (V?t?m?nescu, Nistoreanu & Mitan, 2017). However, the customers show a positive response to the creativity in the digital economy. Consumer prefers creative engagement. Customers often share their experiences through using social networking sites and they recommend the brand, which delivers excellent service.

Challenges in Strategic Decision-Making in Digital Economy

Maximum organizations use digital technology to reduce the interaction cost. As a result, there is lack of creativity, which hampers the strategic decision-making in digital economy (Letaifa, 2015). Often the organization focuses on the use of digital channel to encourage the customers. This decision-making is not effective. However, the organization needs to develop some effective digital strategy, which will allow the organization to deliver excellent customer service through using multiple channels. Business organization uses the various app to communicate with their customers (Kenney & Zysman, 2015). Therefore, a large number of customers communicate at different time through different devices with an organization. Hence, by using simple digital channel it is difficult for the organization to understand the changing behavior of the customers. However, modern customers prefer more creativity in digital channel as well as in mobile app. This hampers the strategic decision-making in digital economy in an organization. By using the simple digital channel an organization is not able to identify the changing demand of the customers.

More creativity is the major demand of the modern customers, which affect the decision-making process in digital economy (Ostrom et al., 2015). Hence, by incorporating the creativity into the digital channel an organization is able to understand the changing behavior of the customers.Application of prospect theory will be helpful for an organization to take the strategic decision properly while using digital channel to enhance the customer relationship. This theory will enable the decision-maker to take risk while making any decision. Hence, by following this concept the decision-makers are able to take challenges in order to make creative channels to improve the customer experience.

As for example, in Woolworths the changing behavior of the consumer has affected the strategic decision-making as modern consumers are more heath conscious and want healthy products from the retailers. In order to deal with this issue Woolworths has used creative strategy in digital channel to understand the changing behavior of the consumers. Woolworths has used unique data asset to deal with the consumer changing behavior as these data assets are not present in other consumers (Cmo.com.au, 2018).

Information technology is the main element of digital economy. However, IT provides an opportunity to the customers to interact with the organization through the changing way. In order to get success in a new era, every business requires a proper IT structure. Poor infrastructure of the IT leaves an effect on the decision-making process in digital economy (Kagermann, 2015). Rigid IT structure of an organization allows the organization to respond to the evolving behavior of the customers. If an organization has no proper IT infrastructure then it will create challenges for the organization to react to changing the customer experience. Hence, it has been found that IT has a great implication on strategic decision-making of an organization. If the organization does not incorporate the digital media into their core business then it will be difficult for them to utilize the significant impact of IT. Many organizations focus on the establishment of the user interaction via digital media or mobile apps. This is not enough for the business as they need to include it in their core business.

Issues in Strategic Decision-Making in Digital Economy

Customer wants 24*7 hour interaction with the organization. For the organization, it is important to ensure the 24*7 infrastructure to communicate with the customers at any time via any device. If it is not possible then the strategic decision-making will be affected. Establishment of 24*7 hour service creates issue reading the delivery of the business and managing the customer devices fragmentation (Ng, 2014). A fundamental requirement highlights the strategy that should the business organization take to deliver the proofed application among the customers. Application of satisficing theory will be beneficial for the decision-maker to increase their decision-making capacity by using their intellectual ability. In order to manage the IT devices, the decision-maker can use this theory to deliver the service properly.

As for example Newland has faced challenges due to the poor infrastructure of their IT while communicating with the consumers via digital channel. Due to poor infrastructure they have faced issues in accessing the social media while communicating with the customers (Ntegrity.com.au, 2018).On the other hand, the digital maturity of this organization is not adequate to support the customers. Lack of adequate IT experience leads the organization to face challenges in maximizing the customer experience through digitalization. Hence, it can be said that such organization faced challenges due to the poor infrastructure of the IT, which also hampers their decision-making process in digital economy. However, to utilize the IT properly it is crucial for this organization to improve the infrastructure level of the IT. This will improve the customer experience as well as the strategic decision-making.

To maximize the customer influence is a big issue that affects the strategic decision-making in an organization. However, for the organization customer engagement is crucial to enhance the revenue generation in an organization. Hence, if the customers are not engaged properly with the organization then it hampers the effectiveness of the strategic decision in an organization. For every business organization, it is important to engage the customers through social sharing. This sharing needs to be done through proper way as it will leave a significant effect on the organization (Ostrom et al., 2015). However, often the organizations rely on the focus group or the marketing group to maximize the consumer influence. This hampers the strategic decision-making in an organization. Hence, to influence the customers in the digital economy is a big challenge for the organization, which can affect their decision-making process. In order to deal with the challenge, an organization can introduce their product through social media as it will help the organization to gain feedbacks regarding their new service or product. This will influence the customers towards the decision of an organization.

Case Studies

As for example, in Wesfarmers, the employees try to engage their customers properly in the digital economy. However, in this organization the digital disconnect in customer engagement hampers the decision-making process of this organization (wesfarmers.com, 2018). It has been received that if the customer are not fully engaged in an organization then it is difficult to gain success in digital economy through strategic decision-making. Digital disconnect affects the decision-making process of Wesfarmers as the communication with the consumers is hampered through digital disconnect. As a result, their strategic decision-making regarding the use of digital channel is interrupted.

Conclusion

The entire piece of work highlights the issues related to strategic decision-making in digital economy. However, it has been found that the organization needs to focus where the technical expertise is able to manage the enterprise successfully through digitalization. Therefore, the changing behavior of the customers shows that the desktop is declining and the use of mobile devices is increasing rapidly. Hence, the organization needs to include creative feature in their digitalization to influence the customers. To improve the IT use the organization needs to new the new IT infrastructure to make an innovative customer engagement in their business. Therefore, this will enable the organization to cope with the evolving customer in the global market.

References

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wesfarmers.com. (2018). Wesfarmers. Retrieved 29 April 2018, from https://wesfarmers.com/