Analytical Thinking and Decision Making: Business Expansion Plan

This report provides an overview of analytical thinking and decision-making processes, emphasizing their importance in achieving organizational goals. It discusses the significance of decision-making in resource utilization, business growth, efficiency, and innovation. The report also applies decision analysis to a business problem faced by a small café in Sydney planning to expand to Perth. Using the SMART approach and MAUT (Multi Attribute Utility Theory), the report evaluates different locations for the new café, considering factors like annual rent, goodwill, location, size, brand image, health and safety, and staff. The analysis includes value trees, cost assessments, ranking for goodwill, and assigning weights to attributes to determine the best location for the café.

Analytical thinking and decision making

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Table of Contents
Overview...............................................................................................................................................2
Answer to question 1.............................................................................................................................2
Application - Decision analysis.............................................................................................................3
Answer to question 2.............................................................................................................................4
Answer to question 3.............................................................................................................................5
Answer to question 4...........................................................................................................................16
References...........................................................................................................................................19

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Overview
Decision making processes are used to make important decisions; it is an essential
part of making choice by gathering the information by assessing the solutions. It is an
approach that is used to choose alternative solutions. There are few steps that are taken in the
decision making process. It starts with identifying the problem by gathering the information
and then identifying the alternatives. The best solution is selected among the alternatives then
actions are taking by reviewing the decisions. It helps in achieving the determined goals of an
organisation (Brown-Liburd, Issa and Lombardi, 2015). Decision making process is used in
every department so that growth and drivability is achieved. The process of decision making
is fast and used so that functionality is improved. There are various tools available for making
decisions and is done so that outcomes are obtained in an optimized way. In this report the
important and significance of decision making process is discussed along with its application.
Additionally, a common business problem that is faced in an organisation is also listed by
analysing it using SMART tool. The conclusion is done at the last and the major strengths
and limitation of the business case is done (Brown-Liburd, Issa and Lombardi, 2015).
Answer to question 1
Importance of decision making process
Decision making process is important as it make sure that there is a better utilisation of
resources so that objective of an organisation is achieved. It also contributes in business
growth for achieving the objectives (Hammer, 2015). It increases the overall efficiency and
also facilitates innovation. Decision making process makes sure that decisions are taken in a
way so that employees are motivated. It is important for business managers to take decisions
by analysing in all the directions (Chen, Lu and Wang, 2017). The importance of decision
making is analysed and listed in some of the points below:
 They need to be taken by identifying all the issues as if taken in a wrong direction can
cause downfall in the business. Thus, it is suggested that a step by step process should
be followed for taking decisions (Chen, Lu and Wang, 2017).
 Decisions are taken at every step and they are important for business with the purpose
of making operations smooth (Jiao, Pan, Liang, Feng and Yang, 2016).

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 It also facilitates innovation as they develop new ideas and processes so that
competitive advantage is offered to the organisation (Chen, Lu and Wang, 2017).
 If decisions are taken in right direction it increases efficiency otherwise it can result in
higher returns that too at lower cost.
 If decisions are taken appropriately the objectives can be achieved quickly. This is
due to the fact that decisions are taken after analysing and evaluating all the facts.
 It also helps in choosing a best solution from all the alternatives. There are various
solutions thus the suitable solution is chosen (Jiao, Pan, Liang, Feng and Yang,
2016). Decision making process is one of the essential criteria that help in measuring
the performance of the top level management.
 Decisions are made by following a framework by considering the staff and other
members. The decisions are taken in a way that benefits are offered to the employees
and they feel motivated to work for organisational requirement (Lamb, Becker and
Nunes, 2017).
 It also helps in achieving the goal so that desired results are obtained.
Application - Decision analysis
It is a process that is used to analyse, model and optimize the requirement so that
optimization is done. The objective of decision making process is to make sure that optimized
decisions are made and they can work in unexpected and uncertain situation. Decision
making process first analyses all the solutions from different perceptive and then best
outcome is selected (Hogarth, 2014). Decision making approach is even used by business as
well as in government process. Some of the fields in which decision analysis is used are:
I. Government authorities

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They take decision in a way so that risk could be minimised and research is
implemented so that resources are used efficiently. It supports in managing all the
emergency condition (Biswas, Pramanik and Giri, 2016).
II. In business
They are used in business for launching a new strategy for idea, or while selecting a
process or project to work on, it supports in making management efficient, it also help
in choosing best portfolio and also used in business for making operations reliable and
successful (Biswas, Pramanik and Giri, 2016).
III. Other fields
There are various other fields were decision making process plays an important role.
It is used to make decisions for all the legal processes and biddings (Judge and
Talaulicar, 2017).
Answer to question 2
Decision problem arises due to difference between the present situation and
expectation situation. The gap between current scenario and expected outcomes results in
decision failure (Pennycook, Fugelsang & Koehler, 2015). There are various options
available to solve the concerns with the motive that objectives met. A common problem is
identified and listed below.
There is a small café situated in Sydney, Australia is planning to expand the business by
opening up a new branch in other city. The owner has an innovative idea for expanding their
business in different city. For opening up the café in another city, he plans to purchase shop
on rent for initial time period and work on the factors through which profit and turnovers
could be increased (Crego and Harris, 2017). He plans to open up a new brand in Perth and
planned to open the café this time in a shopping mall so that more customers could be
targeted. Some of the popular shopping centres of Perth were selected that include water
town, forest chase, karrinyup shopping centre, carillon and hay street. These shopping malls
are selected as they are very popular and customers visit these malls frequently according to
the survey. The challenge that is faced for taking a shop on rent in these malls is cost. For
buying even a small shop the cost is very high. On the other hand, the size of shop is very
small as compared it the requirement. Thus, the owner thought of opening the café in
Midland Gate Shopping Centre that is not much expensive but it is a popular mall that is

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visited by customers frequently. It is located in the main market which means it is easily
accessible by the customers. The mall is expanded with various products due to which they
are visited frequently. Now it is difficult to make final decision as selecting the mall in which
café could be opened involves various factors. Some of the factors that need to be considered
while making decision are maintenance charge or the mall rent of the shop, electricity
charges, customers gathering and other expenses (Norman,et. al, 2017). While making
decision the cost as well as benefit caused is considered. The benefits are gained after the
shop is established it is earned due to the turnover and working environment. The factors
through which profit margin can be increased is the number of customers visiting the mall,
size of the shop, services offered to the customers, goodwill and brand image. Thus, it is
crucial decisions that need to be taken owner regarding shop location (Reyna, Wilhelms,
McCormick and Weldon, 2015). To make a correct decision SMART approach is used as it
helps in selecting the best options from the entire available one. The options that are available
for the owner are:
 Water town shopping centre
 Forest chase shopping centre
 Karrinyup shopping centre
 Carillon shopping centre
 Hay street shopping centre
 Midland Gate Shopping Centre
Answer to question 3
SMART approach
It is a technique that works on the approach of MAUT (Multi Attribute Utility
Theory). The decision is taken by considering the weightage given to the each attribute. The
attribute that has high weigh is given more value (Ten Cate,et. al, 2016). It makes
thedecision making approach easy and make sure that best decision is taken by the owner
(Amoyaw and Abada, 2016).
The problem of selecting the location for starting up a café
Name of the Mall Annual Rent ($)
Water town shopping centre(A) 320000

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Forest chase shopping centre (B) 40000
Karrinyup shopping centre ( C) 28000
Carillon shopping centre (D) 35000
Hay street shopping centre ( E) 25000
Midland Gate Shopping Centre (F) 23000
Value tree
The value tree tells about the cost and benefits associated with the decision problem. The cost
that is linked with the rent expenses, payment to staff, maintenance and security deposit. The
benefits through this project can be calculated by turnover that completely depends upon the
goodwill, brand image, size and location of café (Ten Cate,et. al, 2016). The working
condition also plays an important role that could be improved by having a healthy and safety
department and also due to friendly staff members.
Annual Cost related to the malls
Malls
Annual rent
and other
expenses($)
Miscellaneous
cost ($)
Maintenance
cost ($)
Security
Deposit ($)
Total
Cost ($)
Water town shopping
centre 32000 2000 3500 2000 39500
Forest chase shopping 40000 2000 4000 2500 48500
Value Tree
Cost
Rent and
other
expenses
Wroking staff
Maintenanc
e
Security
Deposit
Benefits
Turnover
Goodwill Brand
image
Location
of cafe Size
Working
Conditions
Health and
Saftey
Friendly
staff
members

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centre
Karrinyup shopping
centre 28000 900 2800 1700 33400
Carillon shopping
centre 35000 1800 3600 1800 42200
Hay street shopping
centre 25000 1500 2000 1200 29700
Midland Gate Shopping
Centre 23000 1700 2000 1000 27700
Ranking for the Goodwill
Ranks are been given from the most preferred to least preferred.
Name of the Mall Ranks
Hay street shopping centre 1
Forest chase shopping
centre
2
Water town shopping centre 3
Carillon shopping centre 4
Midland Gate Shopping
Centre
5
Karrinyup shopping centre 6
The rating of the goodwill is represented by the graph, showcasing by the numbers
Values 100 Hay street shopping centre
90
80 Forest chase shopping centre
70 Water town shopping centre
60 Carillon shopping centre
50
40 Midland Gate Shopping Centre

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30 Karrinyup shopping centre
20
10
0
Value function Graph
110 120 130 140 150 160 170 180 190 200 210
0
5
10
15
20
25
30
35
40
45
$ Rent
Shop floor area ft
Rent
The value chain graph is made between the rent of the shop and the floor area of the shop.
Assigning the values to the malls as per different factors
The six malls are marked as A,B,C,D,E,F. The values are assigned to each mall on various
attributes like the goodwill of the mall, location of the café, the brand image in other city and
the size of the shop.
Attributes Malls
A B C D E
F
Goodwill of mall 100 80 50 70 60 50
Location of café 100 70 40 60 30 60
Size of café 60 90 75 80 60 50
Brand image 80 60 60 75 35 50

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Health and safety 60 80 70 90 80 60
Friendly staff 70 70 40 80 50 80
Assigning swing weight on the basis of attributes
Location Goodwill Size Brand image Health and Safety Staff
100 Best
90
80 Best
70 Best
60 Best Best
50 Best
40
30
20
10
0 Worst Worst Worst Worst Worst Worst

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The swing for goodwill of mall is taken to 80%, the location of café is taken to 100%, size of
the café is taken as 60%, brand image is taken as 60%, health and safety is taken as 50% and
staff of café is taken as 70%.
The next step in this approach is assigning weights to each and every attribute. The table
below assigns weight to the entire attribute.
Attributes Weights Normalized Weights
Goodwill of mall 80 19.05
Location of café 100 23.81
Size of café 60 14.29
Brand image 60 14.29
Health and safety 50 11.90
Friendly staff 70 16.67
420 100.00
Future, calculating the benefits associated with each mall
(A) Water town shopping centre
Attributes Values (1) Weights (2) (1*2)
Goodwill of mall 100 23.81 2,380.95
Location of café 100 23.81 2,380.95
Size of café 60 14.29 857.14
Brand image 80 19.05 1,523.81
Health and safety 60 14.29 857.14
Friendly staff 70 16.67 1,166.67
9,166.67
Average benefit= 9,166.67/100= 91.66 or 92.
(B)Forest chase
shopping centre
Attributes Values (1) Weights (2) (1*2)
Goodwill of mall 80 19.05 1,523.81
Location of café 70 16.67 1,166.67

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Size of café 90 21.43 1,928.57
Brand image 60 14.29 857.14
Health and safety 80 19.05 1,523.81
Friendly staff 70 16.67 857.14
7,857
Average benefit= 7857/100= 78.57 or 79.
Attributes Values (1) Weights (2) (1*2)
Goodwill of mall 50 11.90 595.24
Location of café 40 9.52 380.95
Size of café 75 17.86 1,339.29
Brand image 60 14.29 857.14
Health and safety 70 16.67 1,166.67
Friendly staff 40 9.52 380.95
4,720.24
Average benefit= 4720/100= 47.20 or 47.
(D) Carillon shopping
centre
Attributes Values (1) Weights (2) (1*2)