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9 Business Decision Logic Analytics for Managerial Decision Making 2. Business Decision Logic
It is virtually impossible to develop a listing of
every type of business decision you will
confront. Classic examples include whether to
outsource or not, when to accept special orders,
and whether to discontinue a product or project.
Although each of these examples will be
considered in more detail, what is most
important is for you to develop a general frame
of reference for business decision making. In general, that approach requires identification of
decision alternatives, logging relevant costs/benefits of each choice, evaluating qualitative issues,
and selecting the most desirable option based on judgmental balancing of quantitative and
qualitative factors. As you reflect on this process, recognize that it begins with judgment (what are
the alternatives?) and ends with judgment (which alternative presents the best blend of quantitative
and qualitative factors). Analytics support decision making, but they do not supplant judgment. 2.1 Outsourcing
Companies must frequently choose between using outside vendors/suppliers or producing a good or
service internally. Outsourcing occurs across many functional areas. For instance, some companies
outsource data processing, tech support, payroll services, and similar operational aspects of running
a business. Manufacturing companies also may find it advantageous to outsource certain aspects of
production (frequently termed the “make or buy” decision). Further, some companies (e.g., certain
high profile sporting apparel companies) have broad product lines, but actually produce no tangible
goods. They instead focus on branding/marketing and outsource all of the actual manufacturing.
Outsourcing has been around for decades, but it has received increased media/political attention
with the increase in global trade. Tax, regulation, and cost factors can vary considerably from one
global region to another. As a result, com...
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