PERCEPTION AND DECISION MAKING

TABLE OF CONTENTS

1.PERCEPTION.........................................................................................................................32. DECISION MAKING INTRODUCTION.............................................................................53. DECISION MAKING PROCESS..........................................................................................6

3.1. Defining a problem..........................................................................................................63.2. Identifying decision criteria.............................................................................................63.3. Allocating weights to the criteria.....................................................................................63.4. Developing alternatives...................................................................................................63.5. Analyzing alternatives.....................................................................................................63.6. Selecting an alternative....................................................................................................73.7. Implementing the alternative...........................................................................................73.8. Evaluating decision effectiveness....................................................................................7

4. RATIONALITY, BOUNDED RATIONALITY, INTUITION.............................................74.1. Assumptions of Rationality..............................................................................................74.2. Bounded Rationality........................................................................................................74.3. Intuition............................................................................................................................8

4.3.1 When do you need intuition?.....................................................................................84.3.2 What is intuition?.......................................................................................................84.3.3 Intuition versus rational analysis...............................................................................94.3.4 How it works?............................................................................................................94.3.5 How to use intuition effectively?...............................................................................9

5. TYPES OF PROBLEMS AND DECISIONS.......................................................................105.1. Structured problems and programmed decisions...........................................................105.2. Unstructured problems and nonprogrammed decisions.................................................10

6. DECISION MAKING CONDITIONS.................................................................................106.1 Certainty:.........................................................................................................................106.2 Risk:................................................................................................................................106.3 Uncertainty:.....................................................................................................................11

7. DECISION MAKING STYLES...........................................................................................117.1 Directive Style................................................................................................................117.2 Analytic Style..................................................................................................................117.3 Conceptual Style.............................................................................................................117.4 Behavioral Style..............................................................................................................11

8. SUMMARY INFORMATION ABOUT THE COMPANY................................................128.1 MILESTONES................................................................................................................128.2 ORGANIZATION CHART............................................................................................13

9. CASE STUDY: FLEET MANAGEMENT DILEMMA......................................................13CONCLUSION.........................................................................................................................16LIST OF REFERENCES..........................................................................................................18

2

1. Perception

Perception is a process by which individual organize and interpret their sensory impressions in order to give meaning to their environment. However what one perceives can be substantially different from objective reality. It need not be, but there is often disagreement. For example, it’s possible that all employees in a firm may view it as a great place to work-favorable working conditions, interesting job assignment- but, as most of us know, it’s very unusual to find such agreement.

A number of factors operate to shape and sometimes distort perceptions. These factors can reside in the perceiver, in the object or target being perceived, or in the context of the situation in which the perception is made.

When an individual looks at a target and attempts interpret what he or she sees, that interpretation is heavily influenced by the personal characteristics of the individual perceiver. Personal characteristics that affect perception include a person’s attitudes, personality, motives, interests, past experiences, and expectations.

Characteristics of the target being observed can affect what is perceived. Loud people are more likely to be noticed in a group than quiet ones. So, too, are extremely attractive or unattractive individuals. Because targets are not looked at in isolation, the relationship of a target to its background also influences perception, as does our tendency to group close things and similar things together. For instance, women, African Americans, or members of any other group that has clearly distinguishable characteristics in terms of features of color are often perceived as alike in other, unrelated characteristics as well.

Attribution Theory Our perceptions of people differ from our perceptions of inanimate objects such as

desk, machines, or buildings because we make inferences about the actions of people that we don’t make about inanimate objects. Nonliving objects are subjects to the laws of nature, but they have no beliefs, motive, or intentions. People do. The result is that when we observe people, we attempt to develop explanations of why they behave in certain ways. Our perception and judgment of a person’s actions therefore, will be significantly influenced by the assumptions we make about that person’s internal state.

Attribution theory has been proposed to develop explanations of the ways in which we judge people differently, depending on what meaning we attribute to a given behavior. Basically, the theory suggests that when we observe an individual’s behavior, we attempt to determine whether it was internally or externally caused. That determination, however, depends largely on three factors: 1. distinctiveness, 2. consensus, and 3. consistency. First, let’s clarify the differences between internal and external causation and then we will elaborate on each of the three determining factors.

Distinctiveness refers to whether an individual displays different behaviors in different situations. Is the employee who arrives late today also the source of complaints by co-workers for being a “good-off?” what we want to know is whether this behavior is unusual, if it is, the observer is likely to give the behavior an external attribution. If this action is not unusual, it will probably be judged as internal.

3

Finally, an observer looks for consistency in a person’s actions. Does the person respond the same way over time? Coming in 10 minutes late for work is not perceived in the same way for the employee for whom it is an unusual case as it is for the employee for whom it is part of a routine pattern. The more consistent the behavior, the more the observer is inclined to attribute it to internal causes.

One of the more interesting findings from attribution theory is that there are errors or biases that distort attributions. For instance, there is substantial evidence that when we make judgments about the behavior of other people, we have a tendency to underestimate the influence of external factors and overestimate the influence of internal or personal factors. This is called the fundamental attribution error and can explain why a sales manager is prone to attribute the poor performance of her sales agents to laziness rather than to the innovative product line introduced by a competitor. There is also a tendency for individuals to attribute their own successes to internal factors such as ability or effort while putting the blame for failure on external factors such as bad luck or unproductive co-workers. This is called the self-serving bias.

Frequently Used Shortcuts in Judging Others

Selective Perception people selectively interpret what they see on the basis of their interests, background, experience, and attitudes.Halo Effect is drawing a general impression about an individual on the basis of a single characteristic.Contrast Effect Evaluation of a person’s characteristic that are affected by comparisons with other people recently encountered who rank higher or lower on the same characteristics.Projection Attributing one’s own characteristics to other people.Stereotyping Judging someone on the basis of one’s perception of the group to which that person belongs.

Specific Applications in Organizations

Employment Interview A major input into who is hired and who is rejected in any organization is the employment interview. It’s fair to say that few people are hired without an interview. But the evidence indicates that interviewers make perceptual judgments that are often inaccurate. In addition, agreements among interviewers see different things in the same candidate and thus arrive at different conclusions about the applicant.

Performance Expectations There is an impressive amount of evidence that demonstrates that people will attempt to validate their perceptions of reality, even when those perceptions are faulty. This characteristic is particularly relevant when we consider performance expectations on the job.

The terms self-fulfilling prophecy, a situation in which one person inaccurately perceives a second person and the resulting expectations cause the second person to behave in ways consistent with the original perception.

Performance Evaluation The performance appraisal represents an assessment of an employee’s work. Although the appraisal can be objective (for example, a salesperson is appraised on how many dollars of sales she generates in her territory), many jobs are

4

evaluated in subjective terms. Subjective measures are easier to implement, they provide managers with greater discretion, and many jobs do not readily lend themselves to objective measures.

Employee Effort An individual’s future in an organization is usually not dependent on performance alone. In many organizations, the level f an employee’s effort is given high importance. Just as teachers frequently consider how hard you try in course as well as how you perform on examinations, so, often, do managers. An assessment of an individual’s effort is a subjective judgment susceptible to perceptual distortions and bias.

The link between perception and individual decision making: Individual in organizations makes decisions. Decision making occurs as a reaction to a problem. Moreover every decision requires the interpretation and evaluation of information. Data are typically received from multiple sources and they need to be screened, processed, and interpreted. Which data are relevant to the decision and which are not? The perceptions of the decision maker will answer these questions. The individual decision maker’s perceptual process will have a large bearing on the final outcome.

2. DECISION MAKING INTRODUCTION

Decision making is the essence of management and it is part of all four managerial functions, plan, organize, lead and control.

Decision making can be regarded as an outcome of mental processes (cognitive process) leading to the selection of a course of action among several alternatives. Every decision making process produces a final choice. The output can be an action or an opinion of choice.

Managers at all levels and in all areas of organizations make decisions. That is, they make choices. For instance, top-level managers make decisions about their organization’s goals, where to locate manufacturing facilities, what new markets to move into, and what products or services to offer. Middle and first-line managers make decisions about production schedules, quality problems, pay raises and employee discipline. But making decisions is not something that just managers do. All organizational members make decisions that affect their jobs and the organization they work for.

At another level, it might be regarded as a problem solving activity which is terminated when a satisfactory solution is found. Therefore, decision making is a reasoning or emotional process which can be rational or irrational, can be based on explicit assumptions or tacit assumptions.

Logical decision making is an important part of all science-based professions, where specialists apply their knowledge in a given area to making informed decisions. For example, medical decision making often involves making a diagnosis and selecting an appropriate treatment. Some research using naturalistic methods shows, however, that in situations with higher time pressure, higher stakes, or increased ambiguities, experts use intuitive decision making rather than structured approaches, following a recognition primed decision approach to fit a set of indicators into the expert's experience and immediately arrive at a satisfactory course of action without weighing alternatives.

5

3. DECISION MAKING PROCESS

3.1. Defining a problem

The decision making process begins with existence of a problem or, more specifically, a discrepancy between and existing and a desired state of affairs.

The most significant step in any decision making process is describing why a decision is called for and identifying the most desired outcome(s) of the decision making process.

This careful attention to definition in terms of outcomes allows one to clearly state the problem. This is a critical consideration because how one defines a problem determines how one defines causes and where one searches for solutions.

Managers have to be cautious not to confuse problems with the symptoms of the problem. Also, problem identification is subjective. What one manager considers a problem might not be considered a problem by another manager. In addition, a manager who mistakenly resolves the wrong problem perfectly is likely to perform just as poorly as the manager who does not identify the right problem and does nothing.

As it can be seen, effectively identifying problems is not simple or trivial. Managers can be better at it if they understand the three characteristics of problems: being aware of them, being under pressure to act and having the resources needed to take action.

Managers become aware of a problem by looking at actual conditions and at the conditions that that are required or desired. If the conditions are not what they should be or what manager would like them to be, then a problem (discrepancy) exist. But that is not enough to make it a problem.

A problem without pressure to act is a problem that can be postponed. To trigger the decision process, the problem must put pressure on the manager to act. Pressure might come from deadlines, competitor actions, organizational policies etc…

3.2. Identifying decision criteria

Once a manager has identified a problem, the decision criteria important to resolving the problem must be identified. That is, managers must determine what is relevant in making decision. Whether clearly stated or not, every decision maker has criteria that guide his or her decision.

3.3. Allocating weights to the criteria

If the relevant criteria are not equally important, the decision maker must weight the items in order to give them the correct priority in the decision.

3.4. Developing alternatives

The fourth step requires the decision maker to list viable alternatives that could resolve the problem. This is the step where decision maker wants to be creative in coming up with possible alternatives.

3.5. Analyzing alternatives

Once the alternatives have been identified, a decision maker must analyze each one in terms of the strengths and weaknesses of each alternative become evident. Some assessments

6

can be done objectively because the point is that most decisions by managers involve judgment.

3.6. Selecting an alternative

Once all the pertinent criteria in the decision have been weighted and viable alternatives analyzed, merely the best alternative can be chosen.

3.7. Implementing the alternative

This step is concerned with putting the decision into action by conveying the decision to those affected by it and getting their commitment to it. If the people who must implement a decision participate in the process, they are more likely to enthusiastically support the outcome than being told what to do. Another thing managers also may need to do during the implementation process is to reassess the environment for any changes, especially if the decision is one that takes a longer period of time to implement.

3.8. Evaluating decision effectiveness

The last step in the decision making process involves evaluating the outcome or result of the decision to see if the problem has been resolved. If this evaluation shows that the problem still exists then the manager would need to assess what went wrong. Was the problem incorrectly defined? Were errors made in the evaluation of various alternatives? Was the right alternative selected but poorly implemented? The answers to questions like this might send the manager back to one of the earlier steps. It might even require starting the whole decision process over.

4. RATIONALITY, BOUNDED RATIONALITY, INTUITION

4.1. Assumptions of Rationality

A decision maker who was perfectly rational would be fully objective and logical. The problem would be clear and unambiguous and the decision maker would have a clear and specific goal and know all possible alternatives and consequences. Moreover, making decisions rationally would consistently lead to selecting the alternative that maximizes the likelihood of achieving that goal summarizes the assumptions of rationality.

Rational managerial decision making assumes that decisions are made in the best interests of the organization.

4.2. Bounded Rationality

Despite the limits to perfect rationality, managers are expected to be rational when making decisions. Managers understand that good decision makers are supposed to do certain things and exhibit good decision-making behaviors as they identify problems, consider alternatives, gather information, and act decisively but prudently.

Managers tend to make decisions under assumptions of bounded rationality; that is, they make decisions rationally, but are limited by their ability to process information. Because they can’t possibly analyze all information on all alternatives, managers satisfies, rather than maximize. That is, they accept solutions that are good enough.

7

Most decisions that managers make don’t fit the assumptions of perfect rationality and, instead, they make those decisions based on alternatives that are satisfactory. However, keep in mind their decision making also may be strongly influenced by the organization’s culture, internal politics, and power considerations and by a phenomenon called escalation of commitment, which is an increased commitment to a previous decision despite evidence that it may have been wrong.

4.3. Intuition

A manager who has had experience with a similar type of problem or situation often can act quickly with what appears to be limited information. Such a manager doesn’t rely on a systematic and thorough analysis of the problem or identification and evaluation of alternatives but instead uses his or her experience and judgment to make a decision.

How common is intuitive decision making? One survey of corporate executives found that almost half of them used intuition more than formal analysis to run their companies. Many managers are using their intuition to make decisions.

4.3.1 When do you need intuition?

Decision making situations where intuitive approach can help most include the following;

Expedient decision making and rapid response are required. The circumstances leave you no time to go through complete rational analysis.

Fast paced change. The factors on which you base your analysis change rapidly. The problem is poorly structured. The factors and rules that you need to take into account are hard to articulate in an

unambiguous way. You have to deal with ambiguous, incomplete, or conflicting information. There is no precedent.

4.3.2 What is intuition?

First, what do we mean by intuition in the context of decision-making? While different definitions emphasize different aspects, there are three key features that characterize the intuitive mode of thinking.

1. The process is dominated by your subconscious mind, even if you use your conscious mind to formulate or rationalize the final results.

2. The information is processed in parallel rather than sequentially. Instead of going through a logical sequence of thoughts one by one, you see the situation more as a whole, with different fragments emerging in parallel.

3. You are more connected with your emotions. For example, it may occur to you that an option you consider does not feel right, even though there is no clear logic to prove that.

8

4.3.3 Intuition versus rational analysis

The main alternative to the intuition-based approach is rational thinking. The rational decision making process relies mostly on logic and quantitative analysis. You consciously analyze all the options. You formulate the main criteria for judging the expected outcomes of your options and you assign certain weights to those criteria to reflect their relative importance. Then, based on the expected outcomes and their weights, you rate your options by their perceived utility. Finally, you choose the option that has the highest rating.

If, for some options, the expected outcomes involve uncertainty, you will also need to incorporate in your ratings the perceived probabilities of different possibilities, or even perform a Monte Carlo simulation.

Rational analysis still plays crucial role in many situations, especially when you have clear criteria and have to deal with extensive quantitative data, like quantitative finance. Yet, you will likely face even more business situations where the rational decision making becomes impractical.

4.3.4 How it works?

The simplest way to make sense of why and how intuition works is to think of it as an advanced pattern recognition device. Your subconscious mind somehow finds links between your new situation and various patterns of your past experiences. You may not recall most of the details of those experiences. And even if you did, it may be very hard to express the lessons you learnt in a form acceptable for analytical reasoning. Yet, your subconscious mind still remembers the patterns learnt. It can rapidly project your new circumstances onto those patterns and send you a message of wisdom. That message comes as your inner voice and will most likely be expressed in the language of your feelings. For example, some of the options or solutions you consider may not feel right to you.

4.3.5 How to use intuition effectively?

The first important thing to keep in mind is that even when you rely on intuition it is still very important to do your homework. The intuition will help you navigate faster through much of unstructured data and can work around certain gaps and conflicts in the available information. Yet, even intuition can be misled if too many of your facts are wrong or missing.

Pay attention to your emotional state. If you are stressed or in a bad mood, your true inner voice will be distorted or lost in the background of your strong negative feelings. A similar effect may happen with strong positive feelings. If you want to hear your inner voice, get over the background of your strong feelings. Feel them through or let them go. Take a walk. Do something refreshing. Say your prayers. Forgive and accept. Sigh. Unclutter your mind.

Finally, you can greatly increase the quality of your intuitive decisions if you include certain elements of the analytical approach. In particular, try to follow the procedure of the rational analysis first. As much as you can, capture on paper the ideas on the main options and the criteria for evaluating your choices. Write down the key facts and factors you need to keep in mind.

Following this procedure is an effective way to feed your subconscious mind with all the relevant data it needs. You will help yourself even more if you put all those notes together on paper as a mind map. By having all the important points written in one place you will also unclutter your mind. At that stage you are much more ready to listen to your inner voice.

9

5. TYPES OF PROBLEMS AND DECISIONS

Managers in all kind of organizations face different types of problems and decisions as they do their jobs. Depending on the nature of the problem, the manager can use different types of decisions.

5.1. Structured problems and programmed decisions

Structures problems are straightforward, the goal of the decision maker is clear, the problem is familiar and information about the problem is easily defined and complete. There is probably some standardized routine for handling the problem. This leads us to “programmed decision,” a repetitive decision that can be handled by a routine approach. Because the problem is structured, the manager does not have to go through an involved decision process. The “develop the alternatives” stage of the decision making process either does not exist or is given little attention.

There are three types of programmed decision that managers rely on:a-) Procedure: A series of interrelated sequential steps that a manager can use to

respond to a structured problem. What is difficult is that identify the problem. Once it is clear, so is the procedure.

b-) Rule: It is an explicit statement that tells a manager what he or she can or can not do. Rules are frequently used because they are simple to follow and ensure consistency.

c-) Policy: A policy is a guideline for making a decision. In contrast to a rule, a policy establishes general parameters for the decision maker rather than specifically stating that should or should not be done. Policies typically contain an ambiguous term that leaves interpretation up to the decision maker.

5.2. Unstructured problems and nonprogrammed decisions

Many organizational situations involve unstructured problems. These are new or unusual and for which information is ambiguous or incomplete. When problems are unstructured, managers rely on nonprogrammed decision making in order to develop unique solutions.

Lower level managers confront familiar and repetitive problems; they mostly rely on programmed decisions such as procedures, rules and policies. The problems confronting managers usually become more unstructured as they move up organizational hierarchy.

Few managerial decisions in the real world are either fully programmed or nonprogrammed. These are extremes and most decisions fall somewhere in between.

6. DECISION MAKING CONDITIONS

6.1 Certainty:

The ideal situations for making decisions is one of certainty, that is, a situation in which a manager can make accurate decisions because the outcome of every alternative is known.

6.2 Risk:

The situation in which the decision maker the decision maker is able to estimate the likelihood of certain outcomes. This ability to assign probabilities may be the result of past

10

personal experiences or secondary information. Under risk, managers have historical data that lets them assign probabilities to different alternatives.

6.3 Uncertainty:

Under these conditions, the choice of alternative is influenced by the limited amount of information available to decision maker and by the psychological orientation of the decision maker.

7. DECISION MAKING STYLES

When it comes to making decisions manager have different styles which are differ along two dimensions.

The first dimension is an individual’s way of thinking. Some of us are more rational or logical in the way we process information. A rational type looks at information in order and makes sure that it is logical and consistent before making a decision. Others tend to be creative and intuitive. Intuitive types do not have to process information in a certain order but are comfortable looking at it as a whole.

The other dimension describes an individual’s tolerance for ambiguity. Some of us have a low tolerance for ambiguity. These types need consistency and order in the way they structure information so that ambiguity is minimized. On the other hand, some of us can tolerate high levels of ambiguity and are able to process many thoughts at the same time.

Some sorts of styles are below;

7.1 Directive Style

Decision makers using the directive style have low tolerance for ambiguity and are rational in their way of thinking. They are efficient and logical. This type makes fast decisions and focus on the short run.

7.2 Analytic Style

Decision makers with an analytic style have much greater tolerance for ambiguity than do directive types. They want more information before making a decision and consider more alternatives than a directive decision maker does.

7.3 Conceptual Style

Individuals with a conceptual style tend to be very broad in their outlook and look at many alternatives. They focus on the long run and are very good at finding creative solutions to problems.

7.4 Behavioral Style

Decision makers with a behavioral style work well with others. They’re concerned about the achievements of those around them and are receptive to suggestions from others.

Although some managers will rely almost exclusively on their dominant style, others are more flexible and can shift their style depending on the situation.

11

8. SUMMARY INFORMATION ABOUT THE COMPANY

• Ulker was established in 1945 as a biscuit producer.• The group now has 65 companies operating in various markets.

• Its products are sold in more than 80 countries around the world.

• It firm has around 30.000 employees.

• 119 female employees take up managerial positions.

• The group’s annual turnover is more than 10 Billion American Dollars in 2008.

8.1 MILESTONES

1944; Sabri Ülker starts manufacturing with only three employees and produces 75 tons of biscuit in his first year.

1950; Products are distributed to sales points at factory gate prices, with no charge for transportation.

1960; Ülker increases product variety. Products are being manufactured using machinery from Germany.

1970; Anadolu Gıda is established in Ankara as a listed company and doubled its biscuit production capacity. Exports are started with the Middle East market the first target.

1983; Facilities producing Biaxially Orientated Polypropylene (BOPP) and cardboard boxes come on stream. Ülker starts manufacturing some of its own equipment.

1992; Ülker enters the margarine, vegetable oil and industrial food oil market. 1993; Its first partnership with a foreign company, Pendik Nişasta, is established. 1995; A second international partnership, on a 50/50 basis is started with Dankek.1996; Ülker enters the milk industry. Ülker’s King Top product wins the Worldstar

Packaging award at the Düsseldorf Interpack Exhibition.2001; Ülker enters the chewing gum, instant soup and cooking additives market. To

expand in foreign markets, the Company establishes chocolate and biscuit factories in various countries.

2002; Ülker’s first baby food brand is created in Ankara in partnership with the Swiss-based Hero company. The Company also starts ice cream and Turkish coffee production. Production of soda beverages starts. A company to market products for sale under supermarket brands is established.

2004; Ülker enters the instant coffee market with its Café Crown brand. The first biscuit factory built from scratch starts operations under the name Eurex Alimentare in Romania. Ülker is chosen as the best candy producer in Europe and receives the Candy Kettle Club Award.

2005; Ülker entered the cereal market with an international partnership built with Kellogg’s. Cereal production starts in partnership with Kellogg’s.

2006; Kalbim Benecol, the Company’s first cholesterol lowering functional food item, is launched.

2007; İçim Smartt is introduced to youngsters to contribute to their mental and physical health. Ülker enters the personal care category with Baby Star.

The company acquired Godiva, the world’s leading premium chocolate company.2008; Ülker entered packaged bread and tea markets.

12

8.2 ORGANIZATION CHART

ADVORSARY BOARDHONORARY BOARDAUDIT DIVISIONCORPORATE GOVERNANCE

HUMAN RESOURCES GENERAL MANAGEMENT CHERCHELL (ALGERIA)FINANCE DEPARTMENT EUREX ALIMENTARE SRL (ROMANIA)SUPPLY CHAIN MANAGEMENT&LOGISTICS FMC (SUUDI ARABIA)TRADE AND MEDIA PURCHASING HI FOOD (EGYPT)PUBLIC RELATIONS GENERAL MANAGEMENT LORD KBF (UKRAINE)REAL ESTATE INVESTMENTS GENERAL MANAGEMENT HAMLE (KAZAKHSTAN)LEGAL AFFAIRS GENERAL MANAGEMENT GODIVA CHOCOLATIER INC. (USA) (BELGIUM)

9. CASE STUDY: FLEET MANAGEMENT DILEMMA

The group has more than 2.000 cars (excluding logistics) in use to implement its basic functions such as sales and marketing operations. All the cars are provided on rental basis which is called fleet rental system. Most of them are rented for 36 months.

There are parties involving in the management of the system such as human resources, purchasing and finance departments and couple of suppliers. (Rent a car companies)

13

The parties are having problem with managing the operation. Owing to these problems company’s main functions are affected and this causes inefficiency and waste of time.

Owing to these problems company’s main functions are affected and this causes inefficiency and waste of time.

The decision to be made is;

Would outsourcing fleet management operation be a good decision to solve the existing problems?

Second step of the process involves listing possible causes and identifying root causes to work on.

Since there is more than a problem it is highly important to work on the root causes rather than symptoms.

The firm’s basic problem is not clearly identifying the ultimate responsibilities of the parties involved.

Some problems are peculiar to the firm. Since the group consists of 65 companies it is difficult to run the operation smoothly.

In the third step it is crucial to generate and clarify potential solutions and produce a list of as many ways as possible to solve the problem.

As a first possible solution, a department can be established to deal with fleet management operations.

Secondly, all the operation can be outsourced. A firm can operate professionally on behalf of the company.

Fourth step involves selecting and planning the solution. When planning solution it is important to determine the selection criteria. Which criterion is more important to the company?

For the company the first criterion in the short run is efficiency rather than minimizing the costs. This approach is expected to minimize the average cost in the long run.

In the fifth step group members will implement the solution. There is an implementation plan which should be monitored.

If it is possible, using a tracking system as to evaluate the progress and effectiveness of the solution.

After all the data available analyzed and experiences taken into account, the decision was made in favor of the outsourcing the operation.

Terms and conditions were negotiated with the Outsourcing firm by Trade and Purchasing department and workflow was studied and determined as following.

14

GROUP COMPANIES OUTSOURCING FIRM SUPPLIERS GASOLINE FIRM

Demand For The Car

Firm'sGM

HR GroupManager

HR GM

DivisionCEO

Human ResourceResponsible

Demand Received

Order Confirmation

Law DepartmentApproval

Contract Signed

Car Handed InAutomatic Gasoline Tools and Pre-paidEquipment For The

Toll Roads Are Fixed

Contract SignedWİth The Group

Company

All The Information is Typed Into The Online Tracking

The Car Deliveredto Employee

Denied

Denied

Denied

Denied

Approved

Approved

Approved

Approved

Conrtact Signed

15

GROUP COMPANIES OUTSOURCING FIRM SUPPLIERS GASOLINE FIRMAFTER DELIVERY OF THE CARS

Car rental invoice

Invoices are made out for car rental, gas

usage and toll

Invoicecheck out

Payment for car rental and oil usage

Payment For Car Rental

Oil expenditure invoice

Oil usage payment

Toll payment

Invoicecheck out

DeniedApproved

Denied

Sixth step involves compiling and displaying collected data.

Comparing business objectives in terms of current state and desired state. It is important to check for new problems created by solution.

Recycle through process to address additional problems/causes when needed.Group learns how effectively solution solved the identified problem. Workflow is

followed efficiently by all the parties and operations are run smoothly with minimum problems.

CONCLUSION

Today’s business world revolves around making decisions, often risky ones, usually with incomplete and inadequate information, and under intense time pressure. Most managers are making one decision after another. Bad decisions can cost millions because today’s complex, fast-moving business environment more is at stake than ever before.

Decision making can be hard. Almost any decision involves some conflicts or dissatisfaction. The difficult part is to pick one solution where the positive outcome can

16

outweigh possible losses. Avoiding decisions often seems easier. Yet, making your own decisions and accepting the consequences are the only way to stay in control of your time, your success, and your life.

In everyday life we often have to make decisions fast, without enough time to systematically go through the above action and thinking steps. In such situations the most effective decision making strategy is to keep an eye on your goals and then let your intuition suggest you the right choice.

As for the case study, the firm has been facing unstructured problems. To solve the problems decision has been made based on intuition. Some time is needed to evaluate the actual results.

17

LIST OF REFERENCES

1. S.P. Robbins.Organizational Behavior. Pearson, Prentice-Hall,(10th Edition)2. S.P. Robbins and M. Coulter. Management. Pearson, Prentice-Hall, 2007 (9th Edition)3. James Reason (1990). Human Error. Ashgate4. Daniel Kahneman, Amos Tversky (2000). Choice, Values, Frames. The Cambridge University

Press5. www.virtualsalt.com 6. www.mindtools.com 7. www.managementhelp.org 8. www.decisionmaking.org 9. http://en.wikipedia.org

18