Decision making

Decision making

1. Scientific

   • Systematic, research based
     • 1. Objectives
     • 2. Gather data
     • 3. Analyse data
     • 4. Select strategy
     • 5. Implement & review
   • Benefits
     • Clear direction
     • Logical
     • Reduces bias
     • Flexible
     • Less risk
     • Easier to defend
   • Decision trees
     • Shows EV and net gain
     • Logical
     • Shows risks, rewards, alternatives
     • Ignores changing nature of business env.
     • Reliant on realistic data
     • Ignores qualitative
     • Bias

2. Intuitive

   • Based on hunch
   • Small firms
   • May be subjective
   • Innovative
   • Benefits
     • Fast & cheap
     • First mover advantage
     • No old data

3. Choosing between scientific and intuitive

   • Speed
   • Info available
   • Size of business
   • Predictability of situation
   • Company culture

4. Risks + rewards

   • Risks
     • Financial
     • Brand
     • Loss of opportunity
   • Rewards
     • First mover advantage
     • Brand loyalty
     • High profit
     • Better productivity
   • Uncertainty
   • Opportunity cost
     • Next best alternative foregone
     • Time and money are scarce

5. Influences

   • Strategy = long term
     • Resources
     • Mission
     • Ethics
     • Cultures
   • Tactical = short term
     • Objectives
     • External env.
     • Stakeholder power