Week 4, Lecture 2
PRINCIPLES OF MANAGEMENT
Learning Outcome
• Understand the decision-making process
and its importance in daily life.
• Learn and apply various decision-making
techniques.
• Develop critical thinking and problem-
solving skills with an example.
DECISION MAKING PROCESS
• Decision making is the process of making choices by
recognizing the problem, gathering information about feasible
solutions, and finalizing the best alternative.
• This process is carried out through an intuitive or logical
process, or a combination of two.
• Intuition is all about using your gut feeling to take a stand on
the possible course of action.
• In contrast, a logical process uses facts and figures to make
scientifically sound decisions.
Why it is important ?
Making informed, sound, and collaborative decisions
can help build a solid organizational direction and
have a favorable impact on costs.
Detail
• Identify the decision. The first step is realizing what decision you need to make and its
nature;
• Gather information. Get relevant information and insights about your decision: what’s
relevant and what’s not? Who can influence the final event?;
• Identify the alternatives. What different courses of action do you have? What different
data interpretations may be possible?;
• Weight the evidence. Based on the intel you have, list the pros and cons of each
alternative and imagine its final outcome. Then, order the alternatives according your
specific value system;
• Choose among alternatives.
• Take action.
• Review the decision and its consequences. Has the outcome satisfied the need in step
one? You may want to review the previous steps and acquire more info on your options,
add additional details and explore other alternatives.
DECISION MAKING
TECHNIQUES
PROS & CONS LIST
• Description: This technique involves creating a list of
advantages (pros) and disadvantages (cons) for each
alternative under consideration. It's a straightforward
way to compare the strengths and weaknesses of each
option.
• Example: A retail company is deciding whether to
open a new store in a different city. Pros might include
increased revenue potential, expanded customer reach,
and diversification. Cons could involve higher
operating costs, management challenges, and potential
competition with existing stores.
Decision Matrix
• Description: A decision matrix is a systematic approach to
evaluate alternatives based on multiple criteria. It helps
assign weights to different factors and calculate a total
score for each option, allowing for an objective comparison.
• Example: A technology company is choosing a software
development framework for a new project. Criteria might
include development speed, scalability, community
support, and cost. By assigning scores and weights to these
criteria, the company can select the framework that best
aligns with its priorities.
SWOT Analysis:
• Description: SWOT analysis involves assessing the
Strengths, Weaknesses, Opportunities, and Threats of each
alternative. It provides a structured way to consider both
internal and external factors influencing a decision.
• Example: An e-commerce company is deciding whether to
launch a mobile app. Strengths could include a strong online
presence and existing customer base. Weaknesses might
involve lack of app development expertise. Opportunities
could be the growing mobile market, while threats could
include competition from established apps.
Six Thinking Hats
• Description: The Six Thinking Hats technique
developed by Edward de Bono encourages individuals
to approach a decision from different perspectives, each
represented by a "thinking hat." It helps explore various
aspects of a problem or decision.
• Example: A pharmaceutical company is deciding on
the direction of a new drug development project. The
"blue hat" could focus on overall project management,
the "green hat" on creative research ideas, the "red hat"
on emotional responses, the "white hat" on data and
facts, the "black hat" on risks, and the "yellow hat" on
potential benefits. This ensures a comprehensive and
balanced evaluation.
CLASS ACTIVITY
• A retail company notices a 25% decline in sales for its flagship
wireless earbuds over the past three months.
• As a manager, how would you analyze the situation, gather relevant
data, and decide on an appropriate course of action to improve sales?
EXAMPLE
1. A manager may notice a decrease in sales for a particular product line (ear buds).
2. May gather sales data, customer feedback, and market trends related to the
declining product line.
3. The manager might consider increasing marketing efforts, modifying the product,
or discontinuing it altogether.
4. The manager might assess the potential impact of increased marketing expenses, the
likelihood of sales improvement, and the overall profitability.
5. The manager may decide to implement a targeted marketing campaign to boost sales
of the struggling product line.
6. The manager might allocate budget for the marketing campaign, assign
responsibilities to the marketing team, and inform sales staff about the upcoming
promotion.
7. The manager would analyze the impact of the marketing campaign on sales figures
and profitability. If the campaign succeeded, the manager may consider it a successful
decision. If not, adjustments may be needed for future decisions.
