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“Ultimately decisions are taken on judgement.” (N2)
The two axes are measured along ordinal scales.
Plotting the interviewed companies on these two axes, using the information obtained
in the semi-structured research interviews, then produces the model shown in figure
6.1. The pattern obtained in figure 6.1 confirms the observations made in section 6.3.
Firstly, it clearly supports the perception that organisations begin to use decision 154 analysis techniques on routine, operational decisions before introducing the
techniques corporation-wide. Secondly, it provides complementary evidence that as
companies introduce more techniques, they tend to use the techniques on more
decisions, some of which can be regarded as strategic. This implies that in companies
that use many decision analysis techniques, the decision-makers are, if not actually
using the techniques themselves, at least involved in the generation of the analysis and
in the interpretation of its results. This confirms the identification of managerial
attitude to decision analysis as a key factor in determining the use of decision analysis
techniques. Thirdly, in the model there are clearly three groups of companies (each
groups is a different colour in the figure). This appears to confirm that organisations
are choosing not to modify which techniques they use or how they use them,
preferring instead to stay within their group. Possible reasons for this were identified
in section 6.3. These include the decision-maker’s perception of decision analysis,
which is coloured by the lack of any empirical evidence that indicates that using
decision analysis is positively associated with organisational performance. R
,Q Proportion of
C F,G A I,J,
HK S,T L B Number of decision analysis tools used
Figure 6.1: A model of current practice 6.5 CONCLUSION
By drawing on the interview data and the insights gained from the behavioural
decision theory literature, the discussion in this chapter has established which
155 techniques upstream companies use for investment appraisal. This has indicated that
the gap identified by earlier research between theory and practice in decision analysis
still exists. This indication of current practice will be used in Chapter 7 to produce a
ranking of the companies according to the sophistication of the decision analysis tools
they use for investment decision-making. In the current chapter a model of investment appraisal in the upstream was produced. Using this model reasons for the
existence of the gap between practice and capability were proposed. In particular, it
was suggested that managers are unconvinced about the value of decision analysis
since there is no evidence that use of the techniques leads to more successful
investment decision-making. Consequently, organisations do not adequately resource
the introduction and use of the methods and managers regard the results as spurious
and pay limited attention to them in their investment appraisal decision-making.
Therefore, the following chapter, focuses on the third research question by using the
indication of curre...
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This document was uploaded on 03/30/2014.
- Summer '14
- The Land