R mnop q proportion of decisions de c fg a ij hk st l

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Unformatted text preview: companies: “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 M,N,O,P ,Q Proportion of decisions D,E 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.

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