DECISION MAKING & CASE ANALYSIS

P.C.MehraProfessor of Marketing

International Management Institute

According to Peter Drucker

The burden of decision making can be lessened and better decisions can result if a manager recognizes that :

“decision making is a rational & systematic process and that its organization is a definite sequence of steps, each of them in turn rational & systematic”

What is a case ?

A case is typically a record of a business issue which actually has been faced by business executives, together with surrounding facts, opinions and prejudices upon which the executives had to depend.

The case method places the student in a simulated business environment and substitutes the student in place of the business manager, who is required to take a set of decisions.

What is expected ?

Develop a capability to take decisions

develop skills in critical thinking. learn the art of reasoning & logical thinking support those decisions with appropriate

analysis …options and pros-cons defend the analysis & recommendations. learn to communicate both orally & in

writing.

Benefits & Limitations

There is no single right or wrong answer to any situation…. The glass maybe half full or half empty…The process of arriving at an answer is what is important.

Individuals will find opinion of others may differ from their own….maybe certain data has been overlooked, weightages assigned are different, issues perceived differently.

The cookie cutter approach does not work.

Handling a case 1st reading….read the case quickly 2nd reading…. read it thoroughly (with the situation

in perspective) Start to identify key issues & key players Sift information that may be relevant relate to the numerical data & make notes

3rd reading…. come to terms with the prevailing situation

Identify any missing information or data Identify the issue(s), cause of the problem Make assumptions, as relevant Apply the learnings to address the issues

Thinking, not reading, is the key

The decision making process

Define the problem Enumerate the decision factors Consider relevant information, make relevant

assumptions Identify the best alternative, pros & cons of

each Develop a plan for implementing the chosen

alternative Evaluate the decision & the decision process &

keep an alternate plan handy.

Elements of problem analysis

Problem definition Diagnosis vs symptoms Cause-effect analysis Concepts & framework Action plan Contingency plan

Define the problem

A problem well defined is half solved

What are the objectives of the decision maker? What are the constraints? How will success be measured?

In a case study, the analyst is frequently given alternative courses of action to consider. A narrow approach is to simply compare these different options. A better approach is to consider the choices in the broader context.

Differentiate between a problem & a symptom

Enumerate the decision factors

Two sets of decision factors must be enumerated:

The alternative courses of action. Essentially based on a set of controllable factors that the decision maker has control over, keeping the overall objective(s) in perspective.

Uncertainties in the environment. Largely factors beyond the control of the decision maker or organization. Necessitating in a set of relevant assumptions being made.

Identify the controllable & uncontrollable factors

Consider relevant information

Relevant information, consists of information that relates to the alternatives identified as being likely to affect future events e.g characteristics of the industry, the competitive environment, situation of the organization (strengths/weaknesses), characteristics of the alternatives themselves.

Will need to cull out relevant information using varying sets of data that should produce an answer to “where are we now?”

Assumptions should be derived from the situation and should be used to fill-in the gaps

Identify the best alternative

The selection of a course of action is not simply a matter of choosing alternative “A” over others but, of exploring alternatives & evaluating identified alternatives & the uncertainties apparent in the process.

Use of tools & techniques such as decision tree, breakeven analysis, payoffs etc.

Essentially determine the implications of the varying decision alternatives in the light of the operating environment , the companies own situation & the desired objectives.

Rule out those not relevant wrt the given situation, the desired objectives & the inherent constraints.

Plan for implementing the chosen alternative

Simply deciding what to do is only one part of the solution.

The decision maker will thus need to plan in terms of when will it be done, by whom, where will the resources …managerial & financial come from.

Resulting in strategy formulation & implementation using various managerial tools.

The crucial part is HOW will it be done.

Evaluate the decision & the process

Having done case analysis it is pertinent to evaluate the decision & the decision processHas a decision been made or only data & facts have been rehashed?Is the decision appropriate (the best in your perception), given the situation?

TEST: Does your decision address the issues/problems identified

What if ????

What if the decision parameters considered do not behave in the manner visualised or anticipated…????

Keep a contingency plan handy !!! Always develop an alternative course of action plan …just in case the planned move doesn’t work!!

Murphy’s law..” if something can go wrong, it will”

Role of instructor

Essentially a facilitator & moderator Calling upon varying opinions Trouble shooting Putting the discussion back on rails Facilitating greater participation by

students Evaluating ‘substance’ from ‘gas’ Assess decision making ability & traits

The good news & the bad news

There is no one solution … the glass could be half full or half empty.

Happy case work !!!