Effective Business Decision-Making Techniques

This assignment discusses the importance of effective business decision-making and introduces two key techniques: SMART goal setting and decision analysis. It provides an overview of these methods, citing relevant studies and publications, and concludes that these approaches can lead to desirable results in managing business problems.

Analytical Thinking and
Decision Making

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1. Significance of decision making and the application of decision analysis.............................1
2. Outline decision problem case of specific business................................................................4
3. Presenting SMART to the outlined business decision problem..............................................8
4. Presenting strengths and limitations of business decision problem......................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business decision problems are required to be solved in effective way so that it may be
able to achieve desired objectives in the best possible way. The enclosed report deals with
analytical thinking and decision-making in business so that multiple attributes problems may be
solved by decision analysis quite effectively. It also discusses importance of decision-making in
the Mark and Spencer and how decision analysis can be applied in effectual way to achieve goals
with much ease. Moreover, it also deals with using SMART technique to formulate effective
steps for solving business decision problems in desired way.
1. Significance of decision making and the application of decision analysis
DECISION MAKING
CONCEPT:
Decision Making is an important concept in the context of management. Management at
every level needs to take important and correct decision for the Mark and Spencer. Decision
making is requires particularly when there are two or more alternatives available with the
management team, whereas, when there is only one alternative or only a single way to solve a
particular problem, there not much need for decision making. Decision making has its existence
in every function of management (Beach and Lipshitz, 2017). For e.g. The very first and
important step of management system is Planning, planning about the resources available and its
optimum allocation. An Mark and Spencer needs to take proper decision regarding its allocation.
In the words of Massie J. L, A decision can be defined as a course of action consciously
chosen from available alternatives for the purpose of desired results.
IMPORTANCE:
Decision Making is at the apex for any firm to run it's business successfully. Some
importance of it are:
 It is the vital component of an Mark and Spencer as it is required at every level of
management.
 It allows an Mark and Spencer to use its available resources in its best possible way.
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 It allows the managers to select the best alternative out of the various alternatives
available with the Mark and Spencer.
 Decision making allows a firm to motivate its employees to work efficiently by providing
necessary guidelines to them.
 It assists an Mark and Spencer to evaluate the performance of its managerial staff as the
decision taken by the managers reflects their efficiency.
 Without proper decision making a firm would not be able to achieve it's desired aims or
goals.
STEPS IN DECISION MAKING:
In order to make a sound decision, proper steps are needed to follow by a manager. It
may differ according to the type of industry, but some common steps that need to follow are:
 The very first step to follow is to recognise the problem that needs to be solved by the
management.
 After proper recognition or identification of the problem, proper analysis is need to be
done.
 Once the problem is analysed, the managers need to develop some alternatives to solve
the issue.
 Now, every alternative is need to be evaluated, from each and every angle of it.
 Out of these alternative, the best alternative is selected and a sound decision is made.
 Now the managers need to implement this decision in the Mark and Spencer.
 After it's implementation, proper review should be taken by the other members of the
firm in order to check the effectiveness of the decision made (Crego and Harris, 2017).
DECISION ANALYSIS
CONCEPT:
Whenever a decision process is conducted, an entrepreneur needs to conduct a proper
evaluation of its decision taken. This evaluation is nothing but Decision Analysis.
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It is very essential to conduct a proper analysis of the decision taken to see if there are any
loopholes in the decision made. It also assists the decision makers to take appropriate decisions
in future as it deals with modelling, optimizing and analysing the decisions made by the
individuals.
The scope of decision analysis is wide. It focuses on the psychology of the individuals in
various decision making. It's reviews helps the decision maker to know its incompetency in
decision making and to avoid those in next alternative plans.
APPLICATION OF DECISION ANALYSIS:
The following shows the most common applications of decision analysis tools:
1. Areas where business units require decision analysis:
 Airline and Hotel Yield industries
 Oil Exploration industries
 Quality Assurance and Control Management
 Crop Protection industries
 Credit and Loan Portfolio Management
 Reliability and Maintenance
 Project Selection
 New product development
 New Venture launching
2. Areas where Government requires decision analysis:
 Emergency Management
 Environmental Risk Management
 Choice of new energy sources
 Research and Development programs
3. Common areas where decision analysis is required:
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 Medical diagnosis
 Bidding and negotiation
 Litigation
This shows the exhaustive list of application of decision analysis.
The non-exhaustive list includes the following:
 Probability theory
 Statistical Decision Making
 Bayes Learning and inference
 Graph theory and paradigms
 Stochastic dynamic programming
 Information theory
 Utility theory, including multi-attribute utility theory
 Game theory
 Negotiations
 Mathematical Programming
 Goal
However, in accordance with the decision making in the entity there will be requirement
of making the adequate planning and strategies as to improve the efficiency and probability of
Marks and Spencer. There has been various issues which are need to be monitored and overcome
with the challenges of business.
2. Outline decision problem case of specific business
Decision should be made effectively by the business so that it may be able to flourish in
the market and easily satisfy customers at large (Salas and Martin, 2017). This is however not an
easy task and require deep thinking related to market and by analysing market conditions,
decisions should be made. This will help business to overcome decision-making problem in
effectual manner. M & S (Marks and Spencer) company which is market leader also faced
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decision-making problem in the past. The problem faced by it was related to choosing raw
material supplier which can effectively met the demand of production department. Therefore,
right decisions were required to be made but it faced several problems in making correct decision
for the betterment of the company.
Supply chain management (SCM) is the process which is directly connected to
production department for meeting demand in effective way. The raw materials are supplied to
production site and then these raw materials are converted into finished products which are sold
to customers (Trémolière, Gagnon and Blanchette, 2017). This process satisfies customers' and
in return profits are generated by firm. The bargaining power of supplier is much low in clothing
sector in UK. As such, M & S constantly changes suppliers, an example is that it has alliance
with British suppliers so that it may achieve good quality of raw materials for production
purpose of clothes. The company is no longer dependent on specific suppliers, this has raised
issues regarding relationship of company with suppliers. As such, bargaining power is much
lowered of suppliers and is significantly changed.
The major problem with M & S is that in Christmas 2012, it had disappointing sales as it had
fallen up to 3.8 %. This issue was not small as in the main season, sales were lowered by much
margin. This problem was evolved because of deficient supply chain management in the
company which had decreased sales. The problem was to be solved effectively by organisation
by choosing right decision related to suppliers. M & S organisation also faced problem related to
decrease in value of Pound Sterling and European debt crisis which has made immense problem
to the company to solve it right handedly. To resolve this issue, it is making certain
modifications so that suppliers may be attracted to revamp some contribution so that loss can be
minimised and decision may be made by selecting right supplier which can supply goods at low
cost and business problem can be effectively resolved.
The partnership between suppliers and company is not good and this has raised major
issues as supply chain management is hampered and eventually production is not made
effectively as well (Norman And et.al, 2017). The expectation of M & S Company is creating
pressure to suppliers and as a result, their bargaining power is also decreasing day by day. The
decision problem should be solved by organisation in effective manner by implementing risk
management so that right supplier may be chosen. But the situation is worse as organisation had
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hard time in recession to effectively manage financial risks of suppliers who were in alliance at
that time.
The decision-making problem can be solved by maintaining good relations with supplier
so that they may be ready to sell raw materials for meeting the demand of production department
and that to with bulk discounts. M & S Company should effectively maintain relations so that it
may be able to solve issues and can met demand quite easily. It should follow Just-in-Time
approach so that suppliers may be attracted and as such, raw material can be supplied according
to the adequate need of production department only. This will help to maintain adequate stock
level with much ease and as a result, wastages can be reduced up to high extent (Jachtenfuchs
and Kasack, 2017).
Furthermore, ability of suppliers to meet quality should also be judged by company. The
delivery schedule should also be strictly in accordance with business contract so that production
may be effectively achieved within time. Apart from this, communication system should be clear
so that suppliers may adhere to needs of company and as such, no miscommunication may be
made. This is required so that clarity and transparency may be effectively maintained between
parties. Financial statement of supplier is required to be analyse by M & S Company so that
correct decision may be made. Moreover, shipment facility should also be analysed so that
effective decision may be achieved. Thus, M & S can solve business decision problem related to
raw material supplier so that it may achieve required production and solve issue in the best
possible way.
Moreover, issues related to choosing new location can be analysed by ensuring that new
place will yield better results, main problem is to opt for better location so that communication
can be effectively achieved. Issue related to computer system should be solved by analysing need
of such system so that work can be accomplished. Service providers should be selected which
can provide better services at reasonable cost (Provis, 2017). While, for choosing effective
software package, technological aspect of business can be analysed and then, package can be
installed at low cost. The main problem comes to business that which package should be
selected, this can be easily done by analysing nature of business. As such, M & S can solve all
these business decision problems quite effectively to achieve goals.
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However, there has been various obstacles in the operational activities of the business
which are need to be recognised by M&S and take effective actions to resolve such issues. There
has been issues which are relevant with poor efficiency of the organisation, improper work
management as well as demotivated workforce. On the other side there is also an obstacle in
terms of having the in-appropriate revenue generation due to lower sales, production and
improper allocation of resources. Therefore, there are several ways on which the organisation
will have the adequate improvements.
By considering the above listed diagram it can be said that there are several problems
which are need to be resolved and overcome. The main problems of the entity is to have the non
talented or non skilled employees which do not reselect any innovative operational activities in
the business and which will be affecting in revenue generation of the business. To helps the
successful business operations there is need to have proper administration by a qualified and
talented leader who will execute and manages the performance of organisation as well as the
employees.
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3. Presenting SMART to the outlined business decision problem
The business decision should be made in effective manner so that problems can be
avoided with much ease. As such, in the above case, M & S Company had faced with issue
related to effective suppliers which can provide goods to convert them into finished goods to
satisfy customers. However, with the use of SMART technique, is a linear additive model which
determines the alternative outcomes over the total performance of the firm. This can be denoted
as Simple Multi Attribute Rating Technique. Therefore, there are several steps which will be
beneficial in terms of having the appropriate business solutions.
SMART:
This tool will be helpful for Marks and Spencer in terms with having the adequate
solutions to their operational obstacles. In addition to this is a linear technique which will be
profitable in terms of decision making and analysis the loopholes of entity which are need to be
resolved and have the adequate solutions. However, in accordance with operational activities of
Marks and Spencer it can be said that the issues such as demotivated workforce and poor
management of the operations which will be resolved by the professional and the effective
solution with be come out through such analysis (The Simple Multi Attribute Rating Technique.,
2014). However, there will be several stages which help in making the accurate and efficiency
decisions and plans for the functioning of the firm such as:
 Stage 1: Identification of the effective decision maker: Being and retail industry M&S
is planing to have the adequate growth in the field of textiles industries. Therefore, in
these regards they are planning to have favourable revenue generation in such
segmentation. There has been plans which are relevant with facilitating and promoting
the industry not in UK but throughout the world to have better consumers and
shareholders.
 Stage 2: Alternative Course of action: In accordance with such stage it can be said that
the business has operations in various nations including India, Turkey, Russia, Greece,
Ireland, Poland, France, Spain, Finland and Hungry. However, it will be beneficial as if
the exapnstion of the outsourcing of this business in various other countries such as
Germany, Bangladesh, Sri Lanka and China for the textile business. Therefore, it is
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necessary to have the appropriate analysis over the production costs and availability of
resources in countries such as
Locations for outsourcing
Labour cost in
Pounds/ Month
Germany (A) £156.4
Bangladesh (B) £46
Sri Lanka (C) £100
China (D) £294.94
 Stage 3: Relevant attributes for decision making: On this stage the managerial
professionals will be benefited in terms of having the alternative solutions to their
problems. However, the motive of firm to have the expansion at various locations there is
need to have proper investigation analysis over the costs requirements in such projects as:
Locations for outsourcing
Labour cost in Pounds/
Month Material cost
Total
costs
Germany 156.4 4.56 160.96
Bangladesh 46 2.68 48.68
Sri Lanka 100 4.65 104.65
China 294.94 6.54 301.48
 Stage 4: Identification of the criteria: In accordance with this stage there has been
assignment of the costs to each operations of the business. However, it will be beneficial
for the entities in terms of making the adequate decisions relevant with investments and
expansion of the operations. There has been use of Statistical data which will be helpful
fpr th managers in terms of analysing the viability of the project and the profitable returns
from such operations.
 Stage 5: Determination of the values to the each attributes: In consideration with this
stage here the proper allocation of the costs to each locations. However, it can e said that
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with the help of such analysis the business will be beneficial in terms of ranking the
locations as well as analysing the weights such as:
Locations duty Quality
Satisfaction of
consumers CSR
Com
fort
consumer
Convenience
Germany 0 1 2 3 1 3
Bangladesh 1 4 4 2 2 1
Sri Lanka 2 3 3 1 3 4
China 0 2 1 4 4 2
Germany Bangladesh Sri Lanka China
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
duty
Quality
Satisfaction of consumers
CSR
Comfort
consumer Convenience
 Stage 6: Determination of weights to each criteria: In accordance with such operations
there has been proper identification of the beneficial location and best source of revenue
generation with the help of analysing the weights of the attributes.
Weight of criteria Attributes of
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Sourcing
Locations
Attributes Weight Germany Bangladesh
Sri
Lanka China
Convenient to buyer 12 20 10 30 10
Quality 15 40 20 10 20
Consumer satisfaction 18 10 30 40 30
Duty 21 0 0 10 40
CSR 11 60 30 40 20
Aggregate benefits 32.5 22.5 32.5 30
Attributes Original Weights Normalise Weights
Convenient to buyer 20 12
Quality 40 15
Consumer satisfaction 70 18
Duty 60 21
CSR 20 11
210 77
 Stage 7: Analysing the weight measurements: At this stage the managerial
professionals will make the adequate decision which will be relevant outcomes from
weight age of each measurement. It helps them in analysing the beneficial location to be
outsourced first.
 Stage 8: Preparation of provision decisions: After analysing the weight of the projects
the beneficial project will be selected and the decision will be made by the managerial
professionals in the entity.
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Weight Germany Bangladesh Sri Lanka China
0
10
20
30
40
50
60
70
Convenient to buyer
Quality
Consumer satisfaction
Duty
CSR
Row 55
Aggregate benefits
 Stage 9: Performing the sensitivity analysis: this is the final stage of adequate decision
making where the managers and all the leading professionals make a concrete decision
which is need to be operated and executed by them.
4. Presenting strengths and limitations of business decision problem
The business decisions should be made by proper follow up of actions made by the
management of company. It is required so that it may be able to achieve common goals within
time frame. By looking at the several issues of M & S Company, it can be analysed that business
decision problems must be effectively handled if business want to succeed in its operations.
Following these assumptions, strengths and limitations of decision analysis problem are listed
below-
Strengths
The decision analysis is required to be made so that business may be able to quote step-
by-step solution for the business problem. This follow can be used by M & S to effectively
resolve problems with much ease. Thus, this is the strength of decision analysis to solve
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problems in effectual manner. It is useful technique to be used by company to assist harder and
more of complex decision problems. The best option is effectively carried out by this technique
so that goals may be achieved quite effectively. As such, evidence based relations are taken by
the management for the betterment of firm. Moreover, it is much effective as it provides explicit
approach in decision-making and this helps organisation to solve it. Moreover, it also provides
systematic approach as well. In simple words, it is much useful as it provides well-structured
analysis to solve problems with much ease (Cristancho and et.al, 2017).
It can be carried out in the above decision-making problem of M & S Company that it
will be useful to carry out SMART goal technique which will provide effective results to pose
problems in well-structured way and as such, it will provide meaningful results. It is required to
be put specific goal and follow other elements such ad goals should be measurable, attainable,
relevant and time bound. As such, by attaining it, business can solve multi-attribute decision
problems with much ease (Stanujkic and et.al, 2017). Apart from this, decision analysis help to
understand various possible outcomes of the problem through which proper and concrete
solutions can be obtained quite easily. Another strength of decision analysis is that it is useful for
measuring goals of the firm with its actual outputs and as such, decision analysis has immense
benefits to company for solving multiple problems in the best possible way. Thus, it should be
used by organisation to attain better results by implementing step-by-step solution to eradicate
problems form its root level.
Weaknesses
The decision analysis having certain advantages has limitations as well. The business
cannot solve such problems by implementing such analysis. This is somewhat correct as every
problem cannot be resolved by posing certain plan steps and then initiating each and every step
for solving it. It is not suitable technique as it is time consuming because management has to
study advantages and disadvantages of each and every possible alternatives which provides
nothing but consumes lot of time. Moreover, group decisions are also taken sometime which is
time consuming as well. When group decisions are made, it is based on compromise between
members as not each of them has similar thoughts. Thus, decisions are achieved on compromise
basis because of difference of opinions. As such, when such decisions are taken then, it may not
get desired results to the management and as such, it is not favourable for it which is the biggest
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limitation of such decision analysis to solve business problem of organisation (Calabretta,
Gemser and Wijnberg, 2017). It can be analysed that business problems of M & S Company may
not be solved by such analysis and as such, different approach should be adopted to solve multi-
attribute decision problems to get desired results.
CONCLUSION
Hereby it can be concluded that business decision-making is effective process which
should be attained by company in the best possible way. If it does not make such decisions, then
problems arises which are to be solved by various methods and models to get desired results.
SMART goal technique is effective method to define problems and achieve desired goals. Apart
from this, decision analysis is also important task which provides fruitful results.
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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.
Bettis, R. A., 2017. Organizationally intractable decision problems and the intellectual virtues of
heuristics. Journal of Management, 43(8), pp.2620-2637.
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.
Crego, J. and Harris, C., 2017. 13 Training Decision-Making by Team Based
Simulation. Incident command: tales from the hot seat.
Cristancho, S. and et.al, 2017. Putting the puzzle together: the role of ‘problem definition’in
complex clinical judgement. Medical education.51(2). pp.207-214.
Jachtenfuchs, M. and Kasack, C., 2017. Balancing sub-unit autonomy and collective problem-
solving by varying exit and voice. An analytical framework. Journal of European
Public Policy. 24(4). pp.598-614.
Norman, G. R. And et.al, 2017. The causes of errors in clinical reasoning: cognitive biases,
knowledge deficits, and dual process thinking. Academic Medicine. 92(1). pp.23-30.
Provis, C., 2017. Intuition, analysis and reflection in business ethics. Journal of business
ethics. 140(1). pp.5-15.
Salas, E. and Martin, L., 2017. Decision-making under stress: Emerging themes and
applications. Routledge.
Stanujkic, D. and et.al, 2017. New group decision-making ARCAS approach based on the
integration of the SWARA and the ARAS methods adapted for negotiations. Journal
of Business Economics and Management. 18(4). pp.599-618.
Trémolière, B., Gagnon, M. È. and Blanchette, I., 2017. Cognitive Load Mediates the Effect of
Emotion on Analytical Thinking. Experimental psychology.
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