BUSN11079 Analytical Thinking and Decision Making Assignment Sample 2023
Introduction
Every business is required to take effective decisions by analysing the data and info. It has been analysed that in recent times, importance of decision analysis has increased in context of management capability (Hodgkinson and Sadler-Smith, 2018). This is because almost all decisions that is strategic or tactical rely on capability of management.
Thus, there are various theories and models applied to take effective decision. Also, business growth depends on how well decisions are taken. Furthermore, there is a specific process followed to analyse decision so that alternatives are compared.
In this report it will be described about importance of decision making and application of analysis. Besides that, a decision problem will be stated and SMART model is applied. At last pros and cons of decision problem will be explained.
Discuss the importance of decision making and the application of decision analysis
In an organization the process of decision making is highly complex. This is because it requires to understand feasibility and risks of decision and what outcomes will be obtained from it. Thus, decision making plays a significant role in organization (Gallivan and Flanagan, 2018).
It is also an important function of management. It is said that within decision making there is nothing that can be performed in business. Along with it, decision making is necessary as it is useful to identify new challenge and issues. So, with those problems are solved out and it leads in growth of firm. It is mentioned as below:
Efficient use of resources – It is important for company to use resources in efficient way. It enables in developing need of future growth. If resources are not utilized properly then it may impact on business productivity.
Business growth– This is main purpose of decision making. It is needed to grow business by taking good decisions which are better for future growth. The decision lay foundation of how goals are attained.
Facilitate innovation – Decision making is essential to bring up new ideas. If innovation is not facilitated than new products or methods are not adopted. Hence, without innovation company cannot sustain in market (Bossaerts and Murawski, 2017).
Inspire employees – It is found that if decisions taken are effective and accurate so it inspires staff. This is because they help in moving in right direction. Moreover, effective decisions enable in growth of business as well. So, it is also a way to inspire staff through decision making.
Besides that, decision making makes it easy to set plans and giving direction to business. Without decision there is nothing which can be done. With help of rational decisions, the overall firm goals are achieved. In its alternatives are evaluated along with its outcomes.
Decision making increase efficiency as well. For instance- if there is low return than decision is taken to boost productivity. There is a specified procedure which is followed in taking decision. It includes certain steps through which decision is taken.
However, decision analysis is method of decision making. In these all-decisions aspects is assessed. Then, on basis of that correct decision is taken whose outcome is favourable. Here, all alternatives are evaluated in context of values, risks. Moreover, decision analysis helps in getting insight about difference in various alternatives (Green and Chen, 2019).
For that, numbers are used in order to quantify decisions. So, results attained in numeric terms they are than translated into subjective ones to gain insight about quantify input. There is a particular model which is used by business in analysing decision. The models consist of certain components which are as follows
Probabilities- in this the probability of taking each decision is analysed. This means that it is found out which decision is having high chances of being taken.
Value of alternatives – Here, values is assessed of various alternative on basis of preference. The values are evaluated by decision makers. It gives them overview of which alternative is accurate in decision making.
Value to measure objective – Then, weight is given to value on basis of objectives. This is done to calculate average weight of all values so that best one is selected.
Preference for risk – This means to assess decision and what risks are associated with it. Hence, preference for risk is identified by which actions are taken.
Taking decisions is the core part of every organization management team. If any wrong decision is taken then it would be having negative consequences on the organisation. It may affect its overall functioning making it difficult for organisations to attain their goals.
Hence, after analysis of variables decision analysis is done. The model evaluates outcome sensitivity, probabilities, parameter for risk. Also, it is found that decision theory is used in it which allows in computing of values of outcome and probability. Alongside, it is stated that existence of object is of great importance in model (Ricco and Owens, 2021). This is because on basis of its problem is determined and alternative is evaluated.
Generally, it is observed that in most organization uses techniques and mathematic model in decision analysis. With it there is ease in analysing choices between actions in order to obtain result and then the best and optimum decision is selected. The decision maker is also able to optimize pay off from the alternatives. Therefore, in this way decision analysis is done to solve a problem.
Identify and outline a decision problem relating to work or an external organisation
In above section it is discussed about decision analysis so there is need to find out a decision problem so that alternatives are identified of problem based on objectives which is formed after understanding problem. Thus, here a scenario of Argos is taken which is a retail store.
It operates in many countries and offer variety of products. It is found that there is issue in resource planning. This is highly affecting on their operations and overall growth. The resources are not being utilized and in certain areas there is lack of resources. Therefore, company management have decided to implement ERP for resource planning.
But in decision making issue faced is the cost will rise from it. The reason behind ERP is efficient utilisation of resource and reducing its wastage (Voin, 2019).
However, there are certain alternate decision as well which can be taken. Here, new and other technology can be used instead of ERP. For instance- use of software Oracle, Sage. So, they are more compatible than ERP. The attributes of ERP are that it will allow organisation to utilize resources in efficient way.
Apply the Simple Multi-Attribute Rating Technique (SMART) to the outlined decision problem
It is important to make proper and accurate decisions. This is because it helps in solving problem by taking correct decision. The decision makers use various techniques in order to analyses data and make accurate decision. Thus, SMART is application which enables in making accurate decisions. It also supports in solving issues which occurs during entire process by making it easy to take accurate decisions.
In this application there are different steps which is required to be followed. Thus, decision makers use it to make effective decisions. However, in current report it is found that in Argos there are some issues which is rising to implement ERP. Therefore, SMART is used to take an effective decision. It is explained as below:
Step 1- Identify decision maker – It is first stage where there is need to find out that who will take decisions. There is need to fix responsibility so that accurate decision is taken. Also, it must be ensured that decision maker should possess capability as well.
So, in present case the IT department of Argos is required to take decisions. But along with it, they are need to take approval of top management. Thus, it can be found that decision makers are IT department and top management of firm (Lempert, 2019).
Step 2- Identify issues– This is a crucial step in which issues are identified. Here, in implementing ERP it is found that certain issues are there. The employees working in IT unit have to make various changes. Another issue that is found is there is no alternative of ERP system.
There are many new technologies available. Thus, it is confusing for IT unit and top management that which technology needs to be installed for growth of business.
Step 3 – Identify alternatives– In this step the alternatives to decisions are evaluated. It enables in analysing various options. So, there is need to find out alternatives to ERP system. The decision makers are required to identify new technology that can be used instead of ERP.
Moreover, for that they need to evaluate pros and cons of ERP over other system and technology. Hence, there are different options available that can be installed such as Oracle, Sage, Intacct. It contains more advance features than ERP.
Step 4- Determine criteria – Here, in this step there are certain criteria which is determined of decision. In similar way, criteria for selection of ERP system in Argos is found out. Hence, it is analysed that ERP will help management to use integrated applications for managing business operations. Apart from it, IT department staff should find out new criteria for application of ERP. Among all the crucial one will be on fulfilling selected criteria.
So, on basis of that decision makers will be able to analyse efficiency of ERP in attaining objectives for its implementation (Wang and Rada, 2017).
Step 5- Assign value to criteria – This is step where criteria that are selected are given rank on basis of their importance. This help decision maker to identify main criteria for implementing ERP in Argos.
It is simple and easy step in SMART. In current case there may be confusion and certain issues that can rise. The staff of IT department may have different opinions. However, values assigned to each criterion is specified as below:
| Criteria | Value |
| Managing business operations | 85 |
| Cost | 78 |
| Managing system application | 70 |
| Change management | 60 |
Step 6- Determine weight for criteria– After value assign it is a step in which weight is assigned to each criterion. Hence, decision makers are able to collect more info about above criteria. The weight is assigned as per importance of each criterion. With that it becomes easy to take decision whether ERP needs to be installed or not. The IT department workers assign values to criteria. Thus, here process is further simplified.
Step 7- Calculate weight – It is step where average weight of each criterion is calculated. This helps in giving estimate weight of all criteria and then on basis of its decision is taken. The IT staff get normalize value of all the weights. In Argos the calculation of weight is
| Criteria | Weight | Average |
| Managing business operations | 85 | 85% |
| Cost | 78 | 78% |
| Managing system application | 70 | 70% |
| Change management | 60 | 60% |
Step 8- Make decision– As name depict it is step where decision is to be taken. The management of IT department and other members analyses each criterion according to weight given. Besides that, there is also evaluation done of resources, cost required. By analysing above table, it is found that installing of ERP is beneficial for Argos. This is because ERP will help them in managing operations in efficient way. Also, ERP utilise and fulfil all criteria in properly (Uslu and Özcan, 2019).
Step 9 – Do sensitivity analysis – It is last stage where sensitivity analysis is done of decision. Here, the IT department staff evaluate what is cost incurred in context of installing of ERP system within organization. Besides that, various other thing such as risk related to ERP is also analysed. This gives overview about cost as well as risk associated with ERP.
Thus, it can be analysed that decision taken of installing of ERP in organization is good. It is because ERP average weight is high in all criteria. Along with it, ERP will be effective in organizing resources and functioning of operations. The issue of cost and risk can be reduced by proper monitoring of ERP system and coordination of all departments.
Discuss the strengths and limitations of analysis in context of decision problem
By evaluating scenario of Argos where there is decision problem of implementing ERP and issue of rise in cost. However, it is clarified that decision will depend on model adopted for decision making. Even in scenario it seems simple to adopt decision making process and model but the process is complex.
The entire process of analysing problem, comparing of alternatives, taking right decision is difficult (Rusou et. al. 2016). Hence, there are certain pros and cons of analysis which is demonstrated as:
Pros
- The model focuses on understanding of objective of decision to be taken. Hence, it makes it logical to align objective with business process and goals.
- The outcomes are achieved when sensitivity analysis is done in terms of mathematical value. So, as values are numeric it means that there is accuracy in decision making process.
- They’re come alternatives before any decision is taken. So, they all are analysed and it makes easy to give them values on basis of solving of issue.
- There is weight given to each criterion on basis of their importance. So, it makes things easy in selection of criteria and then making decision.
- It is easy and simple to implement model as there is no such complex mathematics calculation which needs to be done.
Cons
- There requires a lot of time to be incur in decision analysis. It also makes it a lengthy process and difficult one as well. There may occur a lot of confusion sometimes in decision analysis.
- If alternative chosen is feasible for solving a problem but in case if situation occurs due to external business environment, then chosen alternative may not be feasible.
- The decision analysis is model is useful only for short term as in long run alternatives are completely changed (Betsch and Glöckner, 2016).
- In this there is no evaluation done of alternatives by which decision is easily taken. Besides, weight given to criteria might be same so in such case there is no tactic given on how to select best option.
Conclusion
From above report it can be concluded that decision making is important for organisation in many ways like facilitate innovation, inspire employees, business growth, etc. Also, decision analysis is method of decision making by evaluating all aspects. In Argos there is decision taken to implement ERP. But there are some issues which is being faced in decision process.
The SMART application consists of various steps which is followed to solve issues during decision making process and make accurate decisions. Moreover, there are some pros and cons of analysis in decision making. Pros are model is logical as it aligns objectives with goals. All alternative are analysed whereas cons are it is time consuming process, model is not useful in long run.
References
Books and journals
Betsch, T. and Glöckner, A., (2016). Intuition in judgment and decision making: Extensive thinking without effort. Psychological Inquiry, 21(4), pp.279-294.
Bossaerts, P. and Murawski, C., (2017). Computational complexity and human decision-making. Trends in Cognitive Sciences, 21(12), pp.917-929.
Gallivan, J.P. and Flanagan, J.R., (2018). Decision-making in sensorimotor control. Nature Reviews Neuroscience, 19(9), pp.519-534.
Green, B. and Chen, Y., (2019). The principles and limits of algorithm-in-the-loop decision making. Proceedings of the ACM on Human-Computer Interaction, 3(CSCW), pp.1-24.
Hodgkinson, G.P. and Sadler-Smith, E., (2018). The dynamics of intuition and analysis in managerial and organizational decision making. Academy of Management Perspectives, 32(4), pp.473-492.
Lempert, R.J., (2019). Robust decision making (RDM). In Decision making under deep uncertainty (pp. 23-51). Springer, Cham.
Ricco, R.B.. and Owens, D.N., (2021). Individual differences in analytical thinking and complexity of inference in conditional reasoning. Thinking & Reasoning, 27(3), pp.319-349.
Rusou, Z., Zakay, D. and Usher, M., (2016). Pitting intuitive and analytical thinking against each other: The case of transitivity. Psychonomic bulletin & review, 20(3), pp.608-614.
Uslu, B. and Özcan, E., (2019). Evaluation of the difficulties in the internet of things (IoT) with multi-criteria decision-making. Processes, 7(3), p.164.
Voin, A.M., (2019). DRAFT UPGRADE PROGRAM ANALYTICAL THINKING. Bulletin de l’Académie internationale CONCORDE, (1), pp.3-16.
Wang, Y. and Rada, T.B., (2017). Meta‐analytic investigations of the relation between intuition and analysis. Journal of Behavioral Decision Making, 30(1), pp.15-25.
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