4 Decisions

4 Decisions - 1 BA 310: Decision Making 2 Roadmap:...

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Unformatted text preview: 1 BA 310: Decision Making 2 Roadmap: Decision-Making What are different decision-making processes? How is decision-making different for different kinds of problems? What is bounded rationality? Satisficing? How do ambiguity, uncertainty and risk affect decisions? How are decisions affected by biases and cognitive shortcuts? What are strengths & weaknesses of group decision-making? The essence of the managers job 3 The Decision-Making Process 1. Problem Identification I need to decide The best franchise to purchase 2. Identification of Decision Criteria Financial Qualification Franchisor History Start-Up Costs Open Locations Franchisor Support 3. Allocation of Weights to Criteria Start Up Costs 10 Franchisor Support 8 Financial Quals 6 Open Locations 4 Franchisor History 3 4. Development of Alternatives Curves Quiznos Radio Shack McDonalds GNC 7. Implementation of an Alternative 8. Evaluation of Decision Effectiveness 5. Analysis of Alternatives GNC Radio Shack McDonalds Quiznos Curves 6. Selection of an Alternative Start Up Costs 10 x 10 = 100 Franchisor Support 3 x 8 = 24 Financial Quals 10 x 6 = 60 Open Locations 8 x 4 = 32 Franchisor History 5 x 3 = 15 Sum to 231 Curves 231 Curves 229 Quiznos 204 Radio Shack 206 McDonalds 229 GNC 4 Types of Problems and Decisions Structured Problems- straightforward, familiar, and easily defined. Unstructured Problems- new, unusual problems for which information is ambiguous or incomplete. __________________________ Decisions a routine (procedure, rule or policy) used to address repetitive, (structured) problems Minimize need for discretion; facilitate efficiency ___________________________ Decisions a unique decision to address (poorly-structured) problems needing customized solutions 5 Rational Decision Making Definition: Rational decision-making is consistent & value-maximizing given situational constraints. The rational decision-maker is objective and logical, carefully defines problems and has a clear goal. Why wouldnt we achieve such rationality? The franchise-selection decision-making process slide discussed shows an attempt to achieve rationality It illustrates well how assumptions of the rational decision-making model are highly demanding Managerial decisions seldom meet all the assumptions 1. Problem Identification I need to decide The best franchise to purchase 2. Identification of Decision Criteria Financial Qualification Franchisor History Start-Up Costs Open Locations Franchisor Support 3. Allocation of Weights to...
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4 Decisions - 1 BA 310: Decision Making 2 Roadmap:...

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