Skip to main content

The Importance of Critical Thinking in Business


This article explains the basics of critical thinking and why it is important for making decisions and solving problems in business, especially for beginners A lot of major companies across the world suffer from declined profits due to making wrong decisions and failing to solve problems for the long-term. Critical thinking is required and helps to analyze current problems which will provide a clear picture on how to solve them effectively without the same problem recurring. Seems exhaustive and time consuming, or boring, but it does help by sorting out unexpected issues if it arises. To be skilful in decision-making and problem-solving, critical thinking plays a major part.

Critical Thinking

Critical thinking is a skill recognized to help people remove junk thoughts and to think clearly by being more realistic. Between any ideas of finding solutions to a problem that needs solving, there is rationality that needs to be understood and the logical connection in such ideas. One example could be that an employer wants to hire a employee to do deliveries for his business, but is unsure whether to hire the job candidate would be the right or wrong decision. He is worried if the new employee is a good or bad driver and the impact it may have on his business.

Critical thinking helps to analyze the strength, weakness, opportunity or threat of employing the new driver, and helps him decide if it is a definite yes or no. It sounds risky, but without first analyzing the candidate's job history, experience, resume, past behavior or character, it is impossible to make a judgement. So the most sensible procedure would be to analyze and think critically and then use analysis tools to come up with a conclusion.

Acquiring critical thinking skills can be done alone without always pursuing other peoples thoughts and opinions all the time, and it is trustworthy and reliable. On the other hand, major businesses use critical thinking especially when the managers and bosses get together at a meeting to make important changes to their company for example. They usually recognize good and poor arguments and some agree whereas some disagree, but this is still considered critical thinking in a positive way to come up with ideas and solutions. If no one respects other peoples views and ideas that differs from theirs, then it is not good critical thinking in the meeting and the company may decline in business because of that.

Methods of Critical Thinking

Critical thinking uses simple techniques such as SWOT or PMI, or even complex ones such as PESTLE and FISHBONE. These are cool tools to analyze a problem rather than using the head alone in in major organizations. They are used to gather information from every angle of a problem to make good judgement calls.

Before we begin on elaborating the critical thinking strategies, let us do an example of a mini case study of myself and I will pretend to be a restaurant owner and manager. Then, focusing only on SWOT and PMI to determine its outcome. Here we go -

Zia owns an Indian restaurant and employs 10 full-time staff and 4 part-time staff for the weekends. The business has been running for nearly 15 years. For the past two years, business has been declining, staff are working overtime but are not paid on time. Staff are leaving voluntarily, and sometimes they quarrel among each other and communication is poor. Orders in the kitchen are not prepared on time and customers complaining about food being served late.

Zia is also struggling to pay the bills and debt collectors are hounding him constantly. To make matters worse, health inspectors are not satisfied with the state of the kitchen because it is a mess and a health hazard. Some kitchen equipment needs replacing that are not up to the safety standards and the inspectors have gave him a few weeks to sort it out. There is a major cash flow in the business currently and Zia needs to find the money to invest on equipment.

For 15 years, the restaurant has not been revamped. Waiters are not professional because Zia hires workers without checking their past employment history or background. He is running the place all by himself and is now struggling because business is declining a new restaurant has been newly opened recently about a mile away from his.

Fortunately, Zia is also a very experienced waiter and chef himself and is a live to work kind of person. He needs to find a solution on how to increase business and motivate staff. His current credit rating is very good despite being in financial trouble and needs to maintain it before it is too late.

Lastly, Zia enjoys spending time with his family and enjoys socializing with his loyal old friends.

The SWOT Analysis

This cool tool deals with and stands for strengths, weaknesses, opportunities and threats when businesses are having issues. SWOT was developed by Dr. Andrew S. Humphrey in the 1970s. Companies who are lacking performance in the sales of their products are at risk of being bankrupt and permanent closure, unless the root causes are identified and and the way these causes are having an effect on the failing business for example. The strategic SWOT tool helps recognize the problems by thinking critically and jotting down all weaknesses and threats the business is facing. It also gives the option of finding any existing strengths or opportunities the business may have to give them some glimmer of hope and use them to their advantage.

SWOT on the case study



Untrained & unmotivated staff

Support from friends

Health inspectors threatening closure

Experienced in the trade

Unable to recruit good workers

Can apply for a loan

Staff threatening to leave

Established for over a decade

Weak communication

Advertising business


Good credit rating



Credit rating may be affected soon

You will notice how the SWOT helped with positive and negative issues of the simple case study by being realistic and critical by means of conceptualizing, analyzing and evaluating the scenario internally and externally. Critical thinking brings out information from reflecting, observing, reasoning, communicating and past experiences etc to guide us with future actions. It is not common for critical thinking being everyday thinking where we all jump to conclusions and make mistakes.

Being critical just adds some logical thinking when it is urgently required to avoid costly mistakes. The more concentration you put into practice, the more you become skillful at being a critical thinker. However, major businesses have more complex issues compared to my typical example and that is when it poses a real challenge to defeat the issues.

PMI - Plus, Minus & Interesting

Scroll to Continue

The PMI tool is somewhat identical to SWOT but both work differently. It is beneficial to solve problems and make decisions from different solutions. PMI also requires critical thinking to make crystal clear judgements. It was developed by Dr. Edward de Bono and is simple to use.

From the case study and SWOT, there are quite a few alternative solutions to choose from. Some of those solutions could be:

  • Staff Training
  • Advertising to compete with others
  • Applying for loan for renovation
  • Hiring recruiters for better employees
  • Staff motivation
  • Fix communication with employees
  • Reduce staff to save money

These are some typical alternatives to ponder on. However, without critical thinking coming into play, it is almost impossible to determine whether to implement those decisions or abandon them. Let us analyze using PMI for one solution and in this case, let us try working on staff motivation.


Pleasant working environment (+4)

Resentment among colleagues (-3)

Promotion (+5)

Reduces staff from leaving (turnover) (+4)

Risk of strikes (-1)

Easier to catch employees lacking interest at work (+4)

Better service to customers (+5)

Disputes over pay (-3)

Provide incentives (+2)

Learning new things (+3)



Improved discipline (+3)



More control (+4)



It does not cost a penny (+2)






You will notice some plus, minus and interesting points under each section after thinking critically. The figures next to each point with pluses and minuses is an estimated score given from a scale of 1-5, where +1 is good and +5 is excellent, and -1 is bad and -5 is terrible.

You can decide and choose the ratings yourself or with groups to agree on these ratings carefully. Or alternatively create a questionnaire and distribute them to the group to get the results whichever way is convenient. Now all we have do is calculate so: 25 + 11 = 36 - 4 = +30.

A score of +30 has been achieved for staff motivation which gives a positive feedback to implement staff motivation for the business. A wise decision has been made so far thanks to the PMI and SWOT.

"Don't let the fear of losing be greater than the excitement of winning."

— Robert Kiyosaki


With critical thinking, we can see how important this skill is to give a good analysis and conclusion to solving problems and making decisions. Practicing these methods does not always mean achieving perfection but it does provide a good learning experience and improving skills. As mentioned earlier, there are other methodologies such as the PESTLE and FISHBONE which digs further into analyzing complex issues for certain industries. This article has narrowed it down to two tools for basic understanding of critical thinking and the manner in which they work. Finally, critical thinking skills has been used for decades and many small and larges businesses has benefited from it. It is not an everyday skill but is very useful when unfortunate issues in the workplace occurs unexpectedly.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2019 Zia Uddin


Rishik Ahmed on May 04, 2020:

Was of great help:-)

Liz Westwood from UK on September 19, 2019:

This is a really interesting hub and explains principles that can be used to address issues not only in business but also in wider life.

Zia Uddin (author) from UK on September 17, 2019:

The world would be a better place with more sanity i suppose.

Carolyn Fields from South Dakota, USA on September 17, 2019:

I believe that we need more critical thinking in all aspects of life.

Related Articles