Analytical Thinking and Decision Making Report for UK Steel

This report delves into the crucial aspects of decision-making and its practical application within the context of UK Steel, a leading steel manufacturing company. The report begins by emphasizing the significance of effective decision-making in addressing business challenges and outlines the decision-making process, including problem definition, alternative identification, and solution implementation. It then explores a specific decision problem faced by UK Steel: declining profitability, and identifies key attributes such as price, reliability, quality, financial condition, and geographical capabilities. The Simple Multi-Attribute Rating Technique (SMART) is then introduced as a method for evaluating multiple alternatives and is broken down into its components, highlighting its utility in supplier selection. The report also discusses the strengths and weaknesses of SMART analysis. The analysis covers how decision-making affects all aspects of the firm and helps to solve problems, increase profitability and production, and the report concludes with a discussion of the importance of analytical thinking and decision analysis in business management.

Analytical Thinking and
Decision Making

Table of Contents
INTRODUCTION...........................................................................................................................1
Question 1 .......................................................................................................................................1
Discussing the importance of decision making and application of decision analysis............1
QUESTION 2 ..................................................................................................................................3
Decision problem with multiple objectives............................................................................3
Question 3........................................................................................................................................5
SMART simple-multi-attribute rating technique for UK Steel..............................................5
Question 4......................................................................................................................................13
Strengths and weaknesses of SMART analysis....................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Decision making is a process which collects all the information and assess it to the
alternatives which helps to solve the business issues and problems effectively. In respect to this
the report covers the aspects of decision making process and also application of decision-analysis
in regards to UK Steel. The problems of reducing profitability is also assessed in regards to UK
Steel. The SMART which is a simple multi-attribute rating technique is also describes in this
report for solving the problem of reducing profits. The application of decision-analysis by
decision makers and analysts is also covered in this report. Finally, the report will discuss the
strengths and weaknesses of the analysis towards the decision making in Sainsburry.
Question 1
Discussing the importance of decision making and application of decision analysis
Decision making is so much important for UK Steel in order to face the various
challenges and difficulties in business operations and other activities effectively. Managers use
the decision making for solving the business issues and problems. Decision making helps both
small and large organisation to solve their issues from which they can increase their profitability
and production. Decisions are normally based on forming a judgement which related to the
numerous factor (Baykasoğlu and Gölcük, 2015). These factors also affect the final results
produced from decisions. Decision making is all about analysing the factors and application of
effective knowledge to collect the information which helps to solve the business issues and
problems. Decision making includes defining the problem, identification of alternatives and
objectives, examining the consequences and finally applying the appropriate solution for the
problem.
Decision making is a critical process that the decision made by managers in UK Steel can
affect all the essential elements of organisation such as resources, management, implementation
of strategies and plans and other prioritization effectively and efficiently. Thus, it can be justify
that decisions made by the managers affect all the aspects and elements within the firm (Brewer,
Sorensen and Stout, 2014).
The world of business is uncertain that there are so many unexpected changes and aspects
take place within the market which enables every organisation to examine the aspects and
different options to select the best one effectively. Decision making is influenced by such factors
uncertainty, risk, different stakeholders, complex structure and various objectives. Thus, the
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decision making process is very complex which changes according to the future requirements
and situations. It is necessary for the decision makers who implement the policies and strategies
that they should evaluate all the factors with the help of their own experience and knowledge to
select the best to find effective results. Decision can be effective with the size and geographical
presence of the firm. Thus, decision making will help both management and organisation in
terms of raising profits and production with available resources. The best solution for the
problems will reduce the chances of uncertainties and the wrong decisions may lead to failure.
In the market segmentation, due to the regular changes and volatile market the decision
makers sometimes find difficulties and feel overwhelmed in comprehending with the
complexities assessed with it (Churchland and Kiani, 2016). Decision makers are human beings
that the capacity of their minds for analysing the information is limited. Thus, managers at given
diversity and complexity level try to simply the issues which whelps towards the proper
management in UK Steel. The managers use different decision-analysis techniques to solve the
complex problems and issues. Analytical thinking and decision-analysis helps managers to to
develop a highly structured framework which helps to clarify the situations effectively and
efficiently. A well structured approach will help managers to break their problems in smaller
parts or sub-categories. This will help them to evaluate the problems or situation effectively and
also to find the best solution for this. Decision-analysis helps to provide a formal mechanism to
integrate with the outcomes and which will also help to produce an outlook to make the most
effective solution (Zhu and Russell, 2014).
The use of decision-analysis helps managers in UK Steel towards effective thinking for
forming and selecting the best action. The decision makers should analyse the possible outcomes
that decision-analysis is based on various techniques which does not assure the effective
solutions but helps to measure the possible solution with the help of evidences. Decision-analysis
also helps managers to manage the resources and information for effective decision making
towards the solution (Claxton, Owen and Sadler-Smith, 2015). They are able to measure the
different factors such as complex structure, stakeholders, objectives, risks and uncertainties with
the help of decision-analysis. Thus, it will help them to make an effective solution for the
problems and issues.
There are so many techniques available for managers in order to reduce or solve the UK
Steel problems and issues such as AHP, SMART, Even Swaps, Decision tree, Macbeth and
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Multi-attribute theory etc. effectively and efficiently. These all methods are significant to use and
also provide support to managers and executives to examine the different aspects and situation
with the help of choosing best method and alternative course of action. This will help managers
to drive the performance and other activities in UK Steel which improve the operational
activities as well. It can be said that different techniques and decision-analysis will help business
and managers to find the appropriate solution towards the problem which leads towards success
and increase the profitability and production effectively.
The decision making process is sometimes difficult for the managers and executives that
it is a subjective process and managers requires to create a set of assumptions and rules which
are directly connected to the outcomes. Sometimes difficulties also occurred due to the
ineffective judgements, assumptions and intuitions which decrease the decision making process
effectiveness. Thus, managers should review their assumptions and plans which help them to
make their decision effective (Dijksterhuis and Strick, 2016). It can be said that analysts fails
sometimes to address the few problems and aspects which affect their decision-analysis and
process of decision making for creating solution. Thus, managers in UK Steel should evaluate all
the elements and factors which are important for decision making and decision-analysis. This
will help them to find the major problems and issues from which they can make their decision
towards the problems and will find the best solution for that effectively and efficiently. Thus, it
can be said that decision making and decision-analysis both are important for the managers in
order to increase the organisations profits and production which will help to achieve the desired
goals and objectives effectively and efficiently.
QUESTION 2
Decision problem with multiple objectives
UK Steel is the leading steel making business that is headquartered in London, UK. There
is a problem identified in UK Steel that the profits are going down consistently from few last
years. The managers analysed the elements which affecting the profits and also identified the
alternative in order to solve the problem effectively. Before that some attributes should be
identified by the managers related to profitability (Wilton, 2014),
Company’s procurement activities are based on ensuring the best value for the firm to meet
consumers wants and desires. All the activities are surrounded with heavy and central buying
that material is purchased from the selected and best reliable suppliers effectively. The firm also
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purchase raw material from domestic and international level according to the suitability and
taking the perspective of quality materials as well as the important requirements. In respect to
this, both business and suppliers are recognise and independent towards the beneficial
relationship which will help them to create more values for the final customers and societies as
well as investors effectively.
In order to maintain the best and appropriate quality of products and services business
needs to maintain good relationship with suppliers and also in under pressure for raw material
requirements and instant delivery for the users effectively. This helps managers to increase the
quality products and services to manage the organisations efficiency towards customers in the
market effectively.
Here are some alternatives which is identified the managers and analysts of UK Steel
which will guide them to towards their effective decision making and decision-analysis as well
as to select the best and appropriate supplier for the firm to increase the production and
profitability effectively (Eling, Griffin and Langerak, 2014).
Price: Cost is the compensation which is provided to the employees by management. The
manager and decision maker analysed that there are so many unnecessary expenses in the firm
which is increasing the cost and decreasing the UK Steel profits effectively.
Reliability: Reliability refers to the effectiveness of products and services offered by UK steel
firm (Vučijak, Kurtagić and Silajdžić, 2016). Decision makers and analysts found that the firm is
wasting a lot of cost on promotional and advertisement activities. Thus, they recommended to
reduce the cost of promotional and advertising activities to make their products and services
more reliable for the customers in the market effectively.
Quality: Quality is associated with the products and services effectiveness effectively. This will
include, raw materials and cost used for the final production. The analysts determined the issue
and recommended to manage the quality of products for maximising the profits (Hayes, 2017).
Financial condition: Financial condition helps to measure the short term financial health of UK
Steel. The decision makers and analysts evaluated that the firm is taking loans from banks in
order to increase the capital for expanding the market activities. Thus, the loans are causing taxes
which affecting the working capital of firm effectively. Thus, the managers and analysts
recommended the top management to reduce the extra expenses to increase the profitability for
the firm effectively and efficiently.
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Geographical condition and Capability: The location of business at different places which can
be at domestic or international level effectively. The products and services capabilities refers to
the effectiveness of products which describes the products and services capability to attract the
customers in the market effectively and efficiently.
Question 3
SMART simple-multi-attribute rating technique for UK Steel
The SMART (simple-multi-attribute rating technique) is based on linear additive model.
The model will be use for the issues and problems which are identified in the previous question.
This will help analysts and decision makers to evaluate the multiple alternative and a holistic
perspective towards the issues (Hung, Tang and Ko, 2015). The method is divided into small
sections which helps to measure the problems with a depth analysis in decision making
effectively. The SMART will help UK Steel to analyse the problems and their alternatives
efficiently. This will help to understand the analysis of decision making to accomplish the
reappraisal of the problems nature. The different alternative which are considered by the analysts
and decision maker are labour cost, inventory, working capital and operating and non operating
expenses effectively. The SMART is classified into 8 sections which are discussed below:
STAGE 1 : Identification of decision maker
UK steel is one the most biggest and effective firm towards making steel products which
have also a wide supply chain (Karelaia and Reb, 2015). The business is too large that company
requires raw material from suppliers that it also need to `increase the number of suppliers in the
portfolio. The main problem for the firm is to decide the best supplier for its production that
there are so many alternative suppliers available in the market. Modelling is an effective method
which will help firm in order to select the best and appropriate supplier for the production
process. It will also help them to identify and determine the solution for this problem effectively
and efficiently.
STAGE 2 : Alternative course of action
The alternative course of action defines that there are number of suppliers available in the
market that business is able to purchase the raw material according to their suitability and
production process (Oppenheimer and Kelso, 2015). this will also help them to save their time
and money for buying raw items. They are also able to reduce the working capital expenses and
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operating and non-operating expenses which will help them to manage the activities for
increasing the profits effectively and efficiently. Modelling will help them to select the best
alternative course of action or supplier in order to purchase the raw materials effectively.
STAGE 3 : Identification of attributes of decision making
In this third stage of SMART where the various attributes are examined and also analysed
by the decision makers and analysts which influences the alternatives effectively. In respect to
this UK steel use attributes such as quality, geographical location, reliability, financial condition
and capability. In the third stage of SMART value tree is used to examine the drawbacks and
benefits of alternatives effectively and efficiently (Swartz and Perkins, 2016). Thus, specific
attributes which helps to pick the effective and advantageous condo which also help to solve the
problems arrived in the firm.
Table 1: Value Tree analyzing benefits and drawbacks
Benefits Drawbacks
Enhance profitability and productivity Demotivation and dissatisfaction in workers
Increase satisfaction in consumers Minimum services and products range
Enhance turnover and market share Decrease the products and services quality
Decrease the liability in UK Steel Enhance the negative environment, stress and
tension between employees and management
STAGE 4 : Assigning value to each attribute
The fourth stage of SMART refers to assign the value of attributes. In respect to this,
there are different scoring given for the best and valid suppliers out of 100 and according to their
performances . UK steel use attributes such as quality, geographical location, reliability, financial
condition and capability (Smith, 2014). The different alternatives for that are inventory, working
capital, operating and non-operating expenses, cost of goods sold and labour cost. In addition to
this, the value given by decision makers to the alternatives is 100 which are the most preferrable
values effectively and efficiently. The various alternative will be determined and judged on the
basis of chosen attribute. This will be done by a table which is given below:
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Weights Suppliers A Suppliers B Suppliers C
Closeness 13.45 45 75 49
Financial condition 10.46 58 65 57
Price 22.45 56 40 48
Product quality 29.52 90 85 32
Reliability 24.12 78 55 68
STAGE 5 : Evaluating weight of each attribute
In the fifth stage of SMART which is very crucial stage the weight is determined for each
attribute with the help of respective problem effectively. It is a crucial job for the decision maker
in order to categories the alternative through their weight (Patterson, Skinner and Foureur, 2015).
This will definitely help analytical thinker to determine the best and appropriate alternative as a
solution for the problem effectively. In respect to this, higher weight is given for product quality
and reliability which covers 29.52% and 24.12% of share effectively. The decision maker is able
to make decisions to achieve the desired objectives and goals of the firm towards the analysis
efficiently. The other values for closeness, financial situation or price have weight of 13.45%,
10.46% and 22.45% weight in total value of actual scores. Thus, it will also help him to evaluate
the effectiveness and dignity of alternatives which helps to determine how effective they are for
solving the problems and issues in the firm.
Attribute % Weight
Closeness 0.1345 13.45
Financial condition 0.1046 10.46
Price 0.2245 22.45
Product quality 0.2952 29.52
Reliability 0.2412 24.12
STAGE 6 : Calculating average weight of each attributes with assigned value
Attribute
Weig
ht
Supplie
rs A
Weigh
ts *
rank
Supplie
rs B
Weigh
ts *
rank
Supplie
rs C
Weights *
rank
Closeness 13.45 45 605.25 75
1008.7
5 49 659.05
Financial
condition 10.46 58 606.68 65 679.9 57 596.22
Price 22.45 56 1257.2 40 898 48 1077.6
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Product Quality 29.52 90 2656.8 85 2509.2 32 944.64
Reliability 24.12 78
1881.3
6 55 1326.6 68 1640.16
Total 100
7007.2
9 `
6422.4
5 4917.67
Aggregate
70.072
9
64.224
5 49.1767
The sixth stage of SMART analysis helps to calculate the weighted average of each
attributes with assigned values. Sum for weight is 7007.29 for supplier A, supplier B has an
weighted sum of 6422.45 whilst supplier C has reported weighted sum of 4917.67. Among all,
supplier A scored high over the others. The process is managed and handled by the decision
makers effectively. In addition to this, decision makers considered the two alternative which are
product quality and reliability both are calculated in a table showed below:
STAGE 7 : Making a provisional decision
In this stage, the decision makers create provisional decision with the help of alternative
based on collected information in previous stages effectively. Thus, the alternatives are
compared with ranks and weights. Decision makers evaluate each and every alternative in order
to identify the best and appropriate one effectively (Proctor, 2014). as per the calculation supplier
A is the most valuable and scorer suppliers among others. Thus the UK steel is able to use both
suppliers for the business operational activities.
STAGE 8 : Sensitive analysis
Weigh
ts
Supplie
rs A
Supplie
rs B
Supplie
rs C
Weights*ra
nk
Weights*ra
nk
Weights*ra
nk
Closeness 0 45 75 49 0 0 0
Financial
condition 0 58 65 57 0 0 0
Price 0 56 40 48 0 0 0
Product
quality 100 90 85 32 9000 8500 3200
Reliability 0 78 55 68 0 0 0
9000 8500 3200
Weigh
ts
Supplie
rs A
Supplie
rs B
Supplie
rs C
Weights*ra
nk
Weights*ra
nk
Weights*ra
nk
Closeness 0 45 75 49 0 0 0
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Financial
condition 0 58 65 57 0 0 0
Price 0 56 40 48 0 0 0
Product
quality 0 90 85 32 0 0 0
Reliability 100 78 55 68 7800 5500 6800
7800 5500 6800
Ranking
Supplier Rank
Supplier A 1st
Supplier B 2nd
Supplier C 3rd
The last stage of SMART refers to analysing the sensitivity of analysis which decision makers
performs to evaluate the chosen alternative effectively. The charts and tables reflecting the
situation that if the weight is given 100% for reliability than the score will be increased for A
7800 and the product quality will consider 9000 efficiently. Apart from all of this, Supplier B
will score a reliability of 5500 and 8500 for product quality component. In case of C supplier the
reliability factor will be 6800 and quality is recorded to very less number to just 3200. In respect
to this, it can be said that A is found as the best supplier hence must be ranked first and business
must purchase supplies from this supplier. It comes at the top that can be seen in the diagram
created below:
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Question 4
Strengths and weaknesses of SMART analysis
SMART is a simple form of multi-attribute utility theory which requires two estimation
preferential independence and independence. It is used by the decision makers in order to
analyse and evaluate the alternative which will help them to reduce the problem in the
organisation effectively and efficiently (Qin and Liu, 2015). It is also the most valuable and
appropriate method which is used by the decision makers to solve the business problems to make
organisation effective towards its operational activities in the market. This will also help them to
implement the plans and strategies from which they can manage and handle the business
activities. However, there are some certain limitation assessed with the SMART framework and
analysis in the business which are discussed below effectively:
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Strengths Weaknesses
 SMART analysis is the most
appropriate and effective method used
by the decision makers in order to
analyse the complex problems and
issues in the business with above cases
effectively.
 The SMART process includes eight
stages that it is a time consuming
process and also a complex system in
order to evaluate the best alternative for
solving the problems.
 The method is helpful that it works on
the weight system in which attributes
are weighted by the decision makers on
the basis of their importance and
effectiveness efficient (Saaty and Ergu,
2015).
 The process of analysing the alternative
is not much convenient that it is
considered towards the framework of
evaluating the issues effectively.
 In the eight stages of SMART method
all the alternatives are evaluated and
analysed by the decision makers which
shows the individual importance of
every alternative which helps to make
effective decisions for the problems
 There are some issues such as selected
alternatives has an impact on eliminated
alternatives that the choice of method is
wrong and incorrect.
 SMART system enables every
techniques of weighting for analysing
and identifying the problems and issues
which reducing the profits in UK Steel
effectively.
 The method is numerical that the weight
of alternatives determined by the
decision makers can be incorrect which
can cause the negative results for the
firm effectively (Schachter and
Mancarella, 2016).
 The system helps decision makers by
reducing the extra efforts for solving
the problems and issues in the firm
efficiently.
 SMART analysis is not used by the
decision makers in the firm in case of
complex problems and number of
alternatives effectively.
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 The method also create ample of
alternatives which helps decision
makers to analyse critically and also
evaluate each and every alternatives for
solving the issues and problems
effectively (Shaban, 2015).
 Multiple objectives are there for
guiding decision makers towards
analysing the problems and issues in
the firm which diminishing the
profitability of organisation.
 The ranking system in SMART process
is sometimes confusing as well as hard
for the top management to reduce the
problems within UK Steel effectively
and efficiently (Singh, Reed and Keller,
2015).
CONCLUSION
It can be understood from the above report that decision making for solving problems in
the organisation is quite difficult as well as important for the firm in order to reduce the issues
which helps to increase the profitability and production effectively. Decision makers and
analysts should be well knowledgeable to perform the tasks of reducing problems from the firm.
The report says that UK Steel which is a retail firm faces problems of diminishing profitability
for few past years effectively. Thus, the SMART method which is a Simple-Multi-Attribute
Technique used by the decision makers and decision-analysts in order to face the problem and
remove it from organisation. The eight stages of SMART will help them to understand and
evaluate the alternatives which will help them to focus on main elements which can remove the
problem of reducing profitability efficiently. Thus, they both are able to provide
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recommendations for top management to focus on areas which causing the problems and remove
it to increase the profitability.
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