Decision Maknal Final 2

8/9/2019 Decision Maknal Final 2

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An

Harvard Business Essentials

Book

By-: KAPIL SHARMAP.G.D.M. 1st Sem.

Roll No.-38


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What is DECISION MAKING ?

Making a choice from various alternatives in doing

something.

Structured rational decision making is an importantpart of all science-based professions, where specialists

apply their knowledge in a given area to makinginformed decisions.


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There are 5 simple steps to make a good Decision

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2

3

4

5


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Step 1 : Identify, define and structure theproblem, issue or opportunity

y Problem: what is wanted/ expected versus the actualsituation.

y How the problem is defined determines the cause andwhere solutions/alternatives are sought


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y Examples: Low yields; Low income; Maize productionversus sunflower production, total mixed ration versushome mixed ration.

Questions:

o Who will make the decision?

o Are there alternative actions?

o What are sources of uncertainty?

o How much detail is needed?


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Questions:

o Involvement of senior management?

o Capital commitment?

o Profit potential?

o

Staff moral, training, motivation and skills?o Revocability?

o Far reaching effect of the decision?


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Questions:

o Is the correct criteria for evaluationo chosen?

o How is judging the outcome of the decision

o done?

o Is specialist help needed?

Keep complete view


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y Keep an open mind

y Explore as many ideas as possible

Questions:

o Maize or sunflower?

o Total mixed or home mixed ration?o Sell now or sell later?

o Use contract harvesting or buying own combine?


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Questions:

o Expected yields and prices?

o What are past prices and yields?

o Non-quantitative data?

(Make use of enterprise and total budgets)


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Collect information

Investigate gesture of an outcome

Get reliable information

Quantitative and qualitative information

Use enterprise budgets


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Examples:

y Own production of raw material, buy concentrates &mix feed

y Produce roughage, buy dairy meal & mix feedy Buy total mixed ration

Make use of the partial budget

(Additional income + expenses saved) > (Loss of income+ additional expenses)


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Make use of decision tree or comparison to considervarious alternatives:

Have open mind Consider many ideas

Thorough study of the farm

Probability of each uncertainty


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y Determine the effect of the decision on the overall farm

(Effect on NPV, repayment ability, solvability,

profitability, efficiency, security, etc)

y Change probabilities

y

If too sensitive, get more information

y Investigate & analyses cost of more info


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y Select the alternative that best meets the establishedgoals

Questions:

o Was the problem analyzed thoroughly?

Judgment & experience take over


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Entails acquiring resources, making detailed plans, constructing atimetable, and communicating plans to the employees. (Listactions in chronological order).

Activities:

y Communicate the decisiony Select personnely Explain difficulties & benefitsy Institute a training programmey Purchase equipment neededy Plan information flowy Plan phasing in the program


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y The final test of the decision: determines whether theproblem was fixed

y What new problems did the decision/solution create?

Activities:

y Execute physical and financial control. (Yield perhectare, liters per cow , cost per liter, gross margin per

hectare or per LSU, etc)


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y The decision-maker takes responsibility for the

decision, but the owner will always take accountability.


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Agood manager learns to recognize when an

issue or problem deserves the time that he

gives it; a hastily made correct decision on thewrong question is time badly used. Judgment

is a key ingredient in the decision-making

process (Giles & Stanfield, 1990)

The more experience a farmer (decision-maker)has, the less time he will need in most cases

to make a decision

Documents

Decision Maknal Final 2