MGT502 Assignment # 1 Idea Solution

MGT502 Assignment # 1

Idea Solution

Seekers

Mr. Usman wishes to buy a new and expensive cellular phone. He searches internet, and consults with his friends and relatives to get some information about the latest models in the market. After one week, he decides to purchase Apple iPhone. While at the store, the salesman explains and proves that he can buy much better phone within the same budget if he goes for Black Berry Torch. Black Berry Torch gives better value for money with respect to performance, design, advance features and warranties. Relying on the available information, Mr. Usman finally decides to buy Apple iPhone.

In the light of above scenario answer the following questions.

Q.1: Identify and explain the decision making model being applied by Mr. Usman for the purchase of a new mobile. (10)

Rational Decision-Making

Model

“A decision-making model that describes how individuals should behave in order to maximize some outcomes”

Steps in the Rational Decision-

Making Model

1. Define the problem.

2. Identify the decision criteria.

3. Allocate weights to the criteria.

4. Develop the alternatives.

5. Evaluate the alternatives.

6. Select the best alternative.

The optimizing decision maker is rational. He or she makes consistent, value-maximizing choices within specified constraints.

The Rational Model

Step 1: Defining the problem

• A problem is a discrepancy between an existing and a desired state of affairs.

Many poor decisions can be traced to the decision maker overlooking a problem or defining the wrong problem.

Step 2: Identify the decision criteria important to solving the problem.

• The decision maker determines what is relevant in making the decision. Any factors not identified in this step are considered irrelevant to the decision maker.

• This brings in the decision maker’s interests, values, and similar personal preferences

Step 3: Weight the previously identified criteria in order to give them the correct priority in the decision.

Step 4: Generate possible alternatives that could succeed in resolving the problem.

Step 5: Rating each alternative on each criterion.

• Critically analyze and evaluate each alternative

• The strengths and weaknesses of each alternative become evident as they are compared with the criteria and weights established in the second and third steps.

Step 6: The final step is to compute the optimal decision:

• Evaluating each alternative against the weighted criteria and selecting the alternative with the highest total score.

Q.2: In your opinion, what other decision making models can be applied by Mr. Usman for such purpose?(10)

Intuitive Decision-Making

“An unconscious process created out of distilled experience”

1. Intuitive decision-making has recently come out of the closet and into some respectability.

2. What is intuitive decision making?

• It is an unconscious process created out of distilled experience. It operates in complement with rational analysis.

• Some consider it a form of extrasensory power or sixth sense.

• Some believe it is a personality trait that a limited number of people are born with.

3. Research on chess playing provides an excellent example of how intuition works.

• The expert’s experience allows him or her to recognize the pattern in a situation and draw upon previously learned information associated with that pattern to quickly arrive at a decision choice.

• The result is that the intuitive decision maker can decide rapidly with what appears to be very limited information.

• Eight conditions when people are most likely to use intuitive decision making:

1. when a high level of uncertainty exists
2. when there is little precedent to draw on
3. when variables are less scientifically predictable
4. when “facts” are limited
5. when facts do not clearly point the way to go
6. when analytical data are of little use
7. when there are several plausible alternative solutions to choose from, with good arguments for each
8. when time is limited, and there is pressure to come up with the right decision

• Although intuitive decision making has gained in respectability, don’t expect people— especially in North America, Great Britain, and other cultures where rational analysis is the approved way of making decisions—to acknowledge they are using it. Rational analysis is considered more socially desirable in these cultures.