Business administration - Program Capstone - Essay Example

memorandum addressing understanding of decision making CEO Senior Manager Understanding of How to Make Important Decisions DATE: 18th June 18, 2011 This memorandum serves to address the issues about decision making at senior manager level. To begin with, almost every decision involves conflicts and dissatisfaction. Challenge for the manager is to pick an alternative which provides positive outcomes that outweighs any possible losses. In order to assess whether a manger is making a good decision, firstly it must be understandable to everyone involved, in a way that the possible consequences and trade-offs are understood and effectively communicated.

Moreover, a manager must specify objectives and prioritize interests, values, concerns and aspirations. Also a manager, who is aware of both short-term and long-term implications of a decision and have a 360 degree approach, makes better decisions (George, 2000). In order to achieve desirable results and better decision making, a manager must identify the purpose of decision and clarify all the uncertainties involved. The amount of risk that a situation at hand can tolerate must be carefully evaluated.

Multiple ideas must be generated and a manager should not adopt a particular perspective, desisting a multidimensional approach of making better decisions. Perhaps the most crucial aspect of making better decisions is reviewing the steps and looking for the implications of it in order to revise them and take corrective actions. In the realm of decision making, assumptions are accepted cause and effect relationships that provides basis for actions and create useful what if scenarios to simulate different realities or possible situations (Facione,2007).

However, they can be dangerous when accepted as realities without proper investigations. With respect to assumptions, the firm I worked with had its own perceptions of issues. For example, the supervisor observed that absenteeism and turnover amongst the employees have been increasing to the point that adequate staff is not available to provide timely output, in turn affecting productivity. Another assumption taken by the manager that was perceived as an opportunity, was that owing to a steady decline in market share of a nearby tourist resort, it was assumed that they will soon close and that would open up opportunities for the business to expand its own operations in the location.

These assumptions in turn, trigger the decision making process and provides opportunities for growth and development, as in the case of the company I worked with. With respect to the assumptions made by the automobile manufacturing, just relying on the gas prices can be dangerous. It must look into various dimensions and multiple factors contributing to the demand of SUVs. Variables like fashion (brand preferences), government policies (subsidies, taxes), hire purchase facilities and income change determine demand.

Moreover the assumption must be quantified to determine its impact. Just considering gasoline prices, can be quite precarious for automobile manufacturers as perhaps a new electric car (supplementary goods) that’s cheaper, can result in a decline in demand for SUVs. Regarding the airline assumptions, the company must study the diverse nature of its customers and should not generalize the demand to all of its users. Moreover, it should consider the nature of distance: short distance as compared to long distance (Mann, 1989).

The assumptions must be studied critically in light of the various substitutes (road, sea and train) and consider their price and service attributes. Also, the nature of decision making must be unambiguous and looked upon from various perspectives, considering all the involved concerned parties. In a nutshell, while making assumptions at corporate level decision making, one must identify, determine criticality and test the assumptions made as they can have far reaching consequences. References Facione, P.

and Facione, N., Thinking and Reasoning in Human Decision Making, The California Academic Press / Insight Assessment, 2007 Monahan, George E. Management Decision Making: Spreadsheet Modeling, Analysis, and Application. Cambridge, UK: Cambridge University Press, 2000. Triantaphyllou, E.; and S.H. Mann (1989). "An Examination of the Effectiveness of Multi-Dimensional Decision-Making Methods: A Decision-Making Paradox". International Journal of Decision Support Systems (5): 303–312. Retrieved 2010-06-25