Decision Making and Strategic Planning

This assignment delves into the realm of decision-making, a critical aspect of strategic planning. It presents various models, techniques, and perspectives on decision-making, including the Simple Multi-Attribute Rating Technique (SMART). The assignment highlights key studies, research papers, and expert opinions that shed light on different approaches to decision-making in organizational settings. From intuition and rationality to deliberative goal-based decision making, this assignment covers a wide range of topics, providing insights into the complexities of decision-making processes.

Analytical thinking
and decision-
making

TABLE OF CONTENTS
INTRODUCTION.....................................................................................................................................1
1. The importance of decision making and the application of decision analysis..............................1
2. Identifying a decisions problems that is faced by the company Sainsbury's during work..........4
3. Applying SMART technique on the decision problem.................................................................4
4.Strength and limitation of SMART technique regarding decision problem of supplier for raw
material...........................................................................................................................................12
CONCLUSION........................................................................................................................................13
REFERENCES.........................................................................................................................................13

INTRODUCTION
Decision-making is an integral part of everyone's life. The effective decisions considering the
growth and welfare of the company the decisions need to be made in the company.. In the context of
organization, correct information is needed for decision making (Janssen, van der Voort and Wahyudi,
2017.). It is a type of cognitive process that results in the selection of best course of action from various
alternatives available. A final choice is produced in every decision-making process which may or may
not prompt action. Decision-making is important as it helps the organization to make use of available
resources in an optimum manner in order to achieve the goals of organization.
In this report critical review will be conducted on the importance of decision-making. It will
also recognize a decision problem that is taking place in the in organization. An illustration will be
given regarding the problems that are faced in work due to not taking effective decisions. Sainsbury
which deals with clothing material in UK is facing issues in order to make a decision in the selection
of suppliers for raw materials. The SMART techniques will be applied to the problems that are
mentioned in the above illustration. This report will also examines the strengths and limitations of the
SMART technique in context of decision problems.
1. The importance of decision making and the application of decision analysis
As stated by Lechler and Salas (2017), decision making refers to the selection of course of
action from the accessible possible options in order to come at a result for a given problem. There is a
need to make decisions in every organization at one point or other as part of managerial process.
Decisions are to be made, in the best interest of the company. A person must weigh the positives and
negatives of each option when trying to make a good decision and should take into consideration all the
alternatives.
According to Stern (2016), decision-making is important as it is useful for the successful
operations of organizational activities. In the organization various activities such as planning,
organizing, directing and controlling are determined by the decision. The strategic decisions such as
planning, controlling and directing are made by the top level management in organization. Across each
level in management, decision making is essential. The tactical decisions such as work division,
fixation of authority and responsibility are made by the middle level management. The regular
operating decisions such as schedule preparation of daily works, work division, delegation of authority
etc. are made by operating level management. Thus, in all levels of management, the decision-making
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function is performed as per the requirement.
According to Parry, Cohen and Bhattacharya (2016), decision-making is essential as it provides
uniformity and smoothness in the performance of organization. Based on the unique knowledge and
ability decision-making allows the managers to give their opinion. Thus, the correct choice on any
topic that is ideal to make decisions can be applied. Decision making not only uses intellectual abilities
to make decisions but also intuition, subjective values and judgment are applied in order to make
decisions more effective.
Decision-making is important as it covers every part of organization and determines all function
s of management. According to nature of works every manger from top level in involved in decision-
making process. According to Olausson and Nyhlén (2017), the various problems that are faced by the
organization can be solved with use of effective decision -making tools. In order to decisions a lot of
precious time is consumed as stated. A lot of time taken to develop an individual decision as the pros
and cons of all the alternatives need to be taken into consideration by the manager. To develop a
decision, advice needs to be taken from many people. As stated by Mitchell, Weaver and Carlson
(2016), the time is also consumed in group decisions as in various meeting and discussion each and
every member needs to give the opinion. This may result in delayed decisions or no decisions. A
compromised decision can be difference in opinion in groups. All the alternatives need to be analyzed
by manager before taking any decisions. The merits and demerits of each alternative need to be studied
by the manager due to inexperience researcher and wrong sampling The limited analysis can be
produced. According to Lovan, Murrayand Shaffer, (2017), the environmental factors such as political,
social, technological and other factors are not fixed and change over a period of time. If there is a
change in factors, appropriate decisions need to be taken. The opportunities for growth can only be
provided with the correct decisions while on the other hand loss and instability can be produced due to
wrong decisions as per
Decision analysis
Decision analysis is an approach which is used to address the important decisions that are
confronted by organizations. It divides the decision problems into a set of smaller problems. When
there are any disagreements among decision-makers, decision analysis can give a better understanding
in order to raise a consciousness about the issues involved and about the root cause of any conflict. In
order to make a decision, this will enhance communication and understanding among the group of
specialists from different fields. The disputed issues can be revealed in the analysis that is not with
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debating as the course of action will still be chosen. A commitment to the course of action will be there
as decision analysis allows different stakeholders to get involve in the decision process and develop a
shared perception of the problems. Only part of problem can be deliberately addressed by decision
analysis in many applications. This partial analysis focuses mainly on the elements of the problem
where insight will be most valuable. A decision problem will not be solved by decision analysis. Its
objective is to produce insight and encourage creativity to assist decision-makers to make efficient
decisions.
Application of decision analysis tools
These are some of the illustration where decision analysis have been applied
Enhancing strategic decision-making through Influence diagrams and Risk analysis
There has been use of tools such as influence diagram and risk analysis at Du Pont chemical
company in order to develop and examine strategies. This analysis has helped them to take into
consideration the effects on the value of the uncertainties of business such as strategies of rivals, market
share and market size. There are many benefits of this approach. The managers also reported that team
building was enhanced as it provided a common ground for information sharing and debate. The
implementation of the selected strategy was likely to be successful as it led to a commitment of action.
The value of business was expected to enhance by $175 million due to development of strategy.
Application of Decision Tree Tool
In order to develop a value for company the mangers at a pharmaceutical company are not able
to reach at joint result on which of out of three research and development (R&D) project they should
undertake. In the pharmaceutical industry R&D projects are mainly characterized by great uncertainty
that take place from both opportunities and threats. There is no relation of future opportunities to the
original goals of R&D project (Hohnisch, Pittnauer and Pfingsten, 2016). For an instance, there is a
development of new and unexpected drugs from a specific molecule that has been screened. The value
to the project can be added by these opportunities. The transparent representations can be created by
making use of decision trees that would open options for the company if each project is undertaken and
the risk that would be associated with it. These trees can guide the mangers to delay the decisions until
further information is available, there may be rise in new opportunities and be pursued and the
appropriate conditions where the project can be abandoned. The attention is drawn toward the key
aspects of the problems and allowed the flexibility of the projects to be taken into consideration when
they are evaluated,thus enabling to develop a informed decision.
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2. Identifying a decisions problems that is faced by the company Sainsbury's during work
The decision problem is faced Sainsbury's while choosing a components of supplier from
abroad. This choice is mainly based on four objectives (Calabretta, Gemser and Wijnberg, 2017). The
manufacturer of the company Sainsbury's wants to fulfill all these four objective. These objective are as
follows-:
 Reduce the cost of annual purchase of the components
 Minimize the average time for delivery
 In each delivery minimize the defective components
 Wants to receive the best after-sales from the supplier.
The company needs to evaluate the suppliers beyond costs. These materials possess distinct
characteristics that makes up the construction industry. As the information is not enough regarding the
suppliers so the company is addressing issues in order to make proper decision. The company is
looking for suppliers that would fulfill all these objectives that is mentioned by the company. The price
of the supplier need to be less, the quality that should be provided by the suppler need to be best and
delivery time should be less.
3. Applying SMART technique on the decision problem
A number of objectives is involved with the decision problems the making of tradeoff's is
avoided by the unaided decision-makers between these objectives. The attractive option may be
rejected as the good performance on some objectives is not allowed to compensate on poor
performance elsewhere. For instance, because of high price a suppler might be rejected in spite of the
delivery time is fast and has excellent after-sales service. When there is too much information to handle
simultaneously these problems can arise. A better understanding of the problems needs to be acquired
by the decision-maker. The decision-makers must be able to explain and justify why a specific option is
favored (Hohnisch,Pittnauer and Pfingsten, 2016).
Simple Multi-Attribute Rating Technique (SMART) was described by Edward in 1977 .It is
based on the linear additive model. It can be used to solve the issues that are faced by company due to
selection of suppliers from abroad. Due to relative simplicity and transparency SMART has been
widely applied to this supplying of raw material problem. All the complexities of a decision and all the
details may not be captured by the SMART. But the important aspect of the problem and how they
relate to one another can be captured by the SMART. The stages for SMART technique can be as
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follows-:
Recognition of decision-maker: In this step, the decision-maker is identified who will make the
decisions. In a company, a decision-maker can be owner or group of people who have been given the
right to take decisions.
Finding the alternative course of action: In this the alternative action is identified by the owner
or decision-maker. It is mainly dependent on the context and purpose of decision (Chen,Moskowitz and
Shue, 2016).
The attributes that are relevant to decision problem are identified: All the attributes that are
related to the issues are identified by the decision-makers. It is a type of data collecting process for the
decision-makers. It will also recognize outcomes of possible actions.
Assignation of values for each attribute: The each attribute that has been identified by the
decision-maker is assigned a value. A value is assigned in order to measure performance of the
alternatives on that attributes. It is essential to limit the dimension of value. The less important criteria
can be omitted in this. The criteria is not included if the weight for selected criteria is low.
Determining weight for each attribute: This step is fairly straightforward for decisions that are
made by one person. It is easier to rank a decision tasks than to develop weightiness order to reflect the
importance of attribute to decision-makers.
The weight average of values is applied to each alternatives: This can provide the measure of
the performance. The 100 is assigned to the most important dimension. A number that is reflecting the
ratio of relative imprinter is assigned to the next most important dimension (Calabretta, Gemser and
Wijnberg, 2017).
Provisional decision is made: A sensitive analysis is performed to see the robustness of the
decision that is made.
In order to support the decisions that is made related to the selection of suppler in the company
the SMART technique can be used to fulfill all the four objectives of the Sainsbury that is mentioned
above. This model was developed on the information that is collected in research about the company.
With the mangers interview were also conducted related to the matters of supply chain or purchasing
process. The model that is shown below is divided into four steps-:
1. The participation suppliers are defined who will be the part of selection process.
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2. The criteria set is defined
3. Application of SMART
4. Examination of supplier who is selected
(Source: Decision support model for selecting and evaluating suppliers in the construction industry,
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Illustration 1: Steps for SMART model

2017)
Definition of suppliers
In order to classify materials the decision-making procedure did not have any procedure. The
five supplier’s locations were selected that were applied on the models on materials by decision-
makers. The model used is applicable for all materials (The Simple Multi Attribute Rating Technique
(SMART) ,2017). The suppliers are represented by location that is represented as follows-: “M” stands
for supplier;YY for supplier number and “D” for material and XX for material number.
Materials
Suppliers Description Supplier's code
Harry Kids Clothing M01. Harry, M02. Harry, M03.
Harry,
M04. Harry, M05. Harry
Jack Men Clothing M23. Jack , M24.
Jack ,
M25. Jack
Peter Ethical wear M09. Peter, M10. Peter,M11.
Peter
Nikk Women clothes M35. Nikk ,M36. Nikk
,M37. Nikk
Richard Formal clothing men and women M56.Richard,M57.Richard,M58.
Richard
Defining the criteria
During this step,a criteria will be defined. After the first meeting that is held in office a
previously drawn up list is given to the decision-maker by analysts (Burns, 2016). The criteria that need
to be considered is defined by the decision-makers. All the criteria that is presented by the analyst is
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considered. The criteria that is made by the decision-makers are as follows-:
Criteria and their description
ID Criteria Description
D1 Quality Management System If in the QMS the supplier have made some practice
then it can be evaluated by the company. The quality
policy,quality manual ,quality records all these aspects
are considered during evaluation.
D2 Unit Price It is mainly dependent on the cost value of the
materials
D3 Lead Time It is time period between placing an order and
receiving the receipt for that order.
D4 Rejection level This deals with the number of orders that have been sent
back due to defects in the materials or delays detected in
the delivery of items.
D5 Cost reduction plans The contribution is evaluated that is made towards the
enhancement of projects that are deployed already or
will be implemented. This may have an impact on the
price of a material. As a outcome,a reduction in price
items is offered by suppliers.
D6 Transport Cost This is related with the cost that is invested in the
transport of materials.
D7 Request for assistance answered This can be measured by the amount of requests for aid
that are transmitted to supplier and the amount
effectively answered.
D8 Time Flexibility A change that need to be made in the company that is
concerned with the delivery time.
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D9 Quantity Flexibility A change that company need to made that is concerned
with the amount of items.
Scales for examining above criteria mentioned
ID Scale for evaluation
D1 The total of standard operating procedures,the available preventing actions and
events of training.
D2 The materials is measures in GBP.
D3 The days that are needed on an average in order to deliver an order,
D4 It can be examined by percentage of rejection
D5 The reduction cost need to be examined in percentage for the project
D6 It need to be examine in GBP.
D7 The request for assistance that is answered need to be examined in
percentage
D8 The change in the average of delivery time that is discussed with the supplier
need to be modified by the company in the last 5 months. Based on the data from the latest five
months this criteria can be evaluated.
D9 Based on the data of latest five months this criteria can be evaluated.
Application of the method
The ranking is given to these attributes in order to make a decision that is based on these
rankings (Decision support model for selecting and evaluating suppliers in the construction industry,
2017). In order to obtain relative importance the ranking is given to these attributes. If the ranking
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given to the attribute is one ,it can be considered that it the most important attribute that is considered
by the company.
The ranking criteria
Criteria Important ranking
QMS 1
Unit price 2
Cost reduction plans 3
Transport Costs 4
Rejection Level 5
Lead time 6
Flexibility of time 7
Request for assistance answered 8
Flexibility of quantity 9
The normalization ranking for Harry supplier material
Evaluation of criteria
D1 D2 D3 D4 D5 D6 D7 D8 D9
Multiple
attribute value
Alternativ
es
W1=0.
3123
W2=0.
2098
W3=01
233
W4=0.1
109
W5=0.
0876
W6=0.
0987
W7=0.
0345
W8=0.
0345
W9=0.
0134
Harry, 1 1 1 0 1 0.668 0.456 0.754 0 0.7456
Jack 0.456 0 0 1 0 0.866 1 0 0.897 0.6234
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Peter 0.76 0.456 0.788 0.788 0.897 0 0 0.896 1 0.6543
Nikk 0.765 0.987 0.987 0.566 0.954 0.987 0.615 0.8 0.921 0.6021
Richard 0.567 0.876 0.883 0.456 0.844 1 0.769 1 0.065 0.7645
Ranking related to the suppliers for Harry material
Ranking of suppliers Multi-attribute value
1st Richard 0.7645
2nd Harry 0.7456
3rd Peter 0.6543
4th Jack 0.6234
5th Nikk 0.6021
The normalized value and ROC weights have been used to make normalized value. The multi-
tribute value is very close for supplier Harry and Richard. The cost of transport can be used by the
decision-maker in order to make a decisions between these both suppliers (Burns, 2016).
A 20% percent per km in cost of transportation can give the final ranking .The decision-maker
of the company will choose supplier Richard has the best multi-attribute value. The result in difference
between Richard and Harry is increase due to 20% increase in the cost of transportation. In order to
negotiate a reduction in the transportation cost decision-makers with suppliers can use this analysis .
4.Strength and limitation of SMART technique regarding decision problem of supplier for raw material
Strength of SMART technique
It can be easily applied without practice - SMART techniques is much easier to use in
comparison with other technique such as Even Swaps especially in cases when they do not have much
practice in applying it (Bolman and Deal, 2017). When applying the SMART technique the number of
errors and mistakes are less. For an instance the confusion when bigger values on one attribute is better
and the larger value on other attribute is worse .In these situation the errors and mistakes are not made
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y this techniques. In the supplier example SMART techniques made decision considering all the
attributes such as cost,delivery time etc.
More information can be gained from the output of the process - More information is provide if
the decision-makers apply smart techniques without errors. In the supplier example all the information
regarding the supplier were clear and exact information about supplier was provided by this techniques.
A list of all option and their connected scores is provided in SMART so that any option that is
near by to second could be identified.
Limitation of SMART technique
Assigning of scores - There is a requirement of SMART to assign scores in order to present the
performance of options on each attributes on a scale of 0-100.
There is requirement of determine swing weights - The difficulties are faced in smart by decision-
makers in understanding the true meaning of swing weights (Beach and Lipshitz, 2017).
It is not closer to a natural decision process - As all the alternatives are preserved within a choice set so
it is less close to descriptions of unaided choice. On the Even swaps have some consistency with the
outputs of physiological studies of unaided choice.
CONCLUSION
Thus summing up the above report it can be concluded that decision-making play s a very
important role in organization. In order to fulfill the goals and objectives of the company the decision-
makers need to make effective decisions. Every member of the company need to [participate in the
decision-making process so as to achieve the goals of the company. Various issues are faced during
making decision as a lot of time is wasted in order to consider the pros and cons of all the alternative
that are available in order to make decisions. Decision-analysis can give better understating about the
issues so as to take more appropriate decisions. The decision analysis tools can be sued to make
decision more effective. The problem that is faced by the company in making decisions regarding
selecting the supplier of raw material can b overcome by using SMART techniques. By using this every
attribute such time,cost and quality will be considered of each supplier and best alternative will be
selected. This technique provide detailed information regarding the suppliers but it is difficult to assign
scores in order to measure performance.
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REFERENCES
Books and Journals
Beach, L.R. and Lipshitz, R., 2017. Why classical decision theory is an inappropriate standard for
evaluating and aiding most human decision making. Decision Making in Aviation, p.85.
Bolman, L.G. and Deal, T.E., 2017. Reframing organizations: Artistry, choice, and leadership. John
Wiley & Sons.
Burns, M.R., 2016. Ethical Decision-Making Examined in Greek Letter Organization Members: A Case
Study.
Calabretta, G., Gemser, G. and Wijnberg, N.M., 2017. The interplay between intuition and rationality in
strategic decision making: A paradox perspective. Organization Studies. 38(3-4), pp.365-401.
Chen, D.L., Moskowitz, T.J. and Shue, K., 2016. Decision Making Under the Gambler’s Fallacy:
Evidence from Asylum Judges, Loan Officers, and Baseball Umpires. The Quarterly Journal of
Economics. 131(3), pp.1181-1242.
Hohnisch, M., Pittnauer, S. and Pfingsten, A., 2016. Designing for Deliberative Goal-Based Decision
Making in Environments with Rare Adverse Events—An Experimental Study. Organization
Science. 27(6), pp.1417-1434.
Janssen, M., van der Voort, H. and Wahyudi, A., 2017. Factors influencing big data decision-making
quality. Journal of Business Research. 70, pp.338-345.
Lechler, T. and Salas, R.E.C., 2017. Editorial overview: Cell architecture: Mechanisms and scales of
cellular organization and decision making.
Lovan, W.R., Murray, M. and Shaffer, R. eds., 2017. Participatory governance: Planning, conflict
mediation and public decision-making in civil society. Routledge.
Mitchell, R.K.,Weaver, G.R., Agle. and Carlson, J., 2016. Stakeholder agency and social welfare:
Pluralism and decision making in the multi-objective corporation. Academy of Management
Review. 41(2), pp.252-275.
Olausson, P.M. and Nyhlén, J., 2017. Organization and Decision‐Making in Enforced Networks: The
River Groups in Northern Sweden. Journal of Contingencies and Crisis Management.
Parry, K., Cohen, M. and Bhattacharya, S., 2016. Rise of the Machines: A Critical Consideration of
Automated Leadership Decision Making in Organizations. Group & Organization Management.
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