Decision Making Pocess
The act of choosing one option and forfeiting the other is the process of decision-making. This process is broken down to six stages.
Stage one: Identify objectives
Definition: An objective is the aim, end or the result of an action, ambition or an aspiration. It is a dream or target. It is advisable for one to know where one is going. Even when predators go for hunting its prey such as lion, cheetah or leopard it has one target such that if it aims at one, it does not change its focus even if a fatter prey come across it. Hence, one setting an objective must be detailed on what to be achieved at the end of the day.
An objective is characterized by SMART
S-Specific: An objective should be specific and not general. It should be exact and to the point such that once achieved, one can empirically prove that.
Example one
Suppose, Ann an entrepreneur has designed a new attire for women and she is planning to introduce it in the market. This will be possible by making sales.
The objective is the sales to be made
Ann should specify the number of sales and monetary amount to be made. Such as 1,000 pieces of that, attire each at $100. The sales amount should be specific
Example two
Suppose the production manager of Seamless Co. ltd is planning to produce product “S”. He should state in his production schedule the number of units to be produced such as 200 or 500 units.
M-Measurable: the planner of an activity or action must identify a measurement indicator or proxy to gauge the specific objective. In research, we say that if a variable or factor is not measurable, then it does not exist. Similarly, if an objective is not measurable, it does not exist.
Example one
The illustration of women attire making by Ann is measured in terms of pieces of dress made. Such as 1000 pieces or 10,000 pieces.
Also, in the case of production manager of Seamless Co. ltd aforementioned measured his products manufactured in term of pieces or units.
Example two
A milk processing plant limited has a mission of processing milk for the locals. The milk will be processed and packaged in terms of litres such as one litre, half litre and quarter litre.
Example three
The financial performance of firms is measured in many ways and the most common ones are market share such as 30% or 57% market share, return on equity, return on investment and return on assets. Such that the expected profitability at the end of the year can be something like 0.12 derived at as follows;
A-Attainable: The planner who can be an entrepreneur or manager should be able to achieve the set objective by first assessing the abilities or capabilities of doing so. In other words, the manager should assess if the organization has enough facilities or capacity to achieve the set objective.
Example one
Happy day co. ltd is planning to process juice for the ready market. The demand level in the market for the month of April is 200,000 litre. The processing manager need to assess the production capacity of the plants available to see if this is possible or not. If the production capacity is 50,000 litres per month, then it means the set target or objective is not attainable. But if the processing capacity of the machineries are 500,000 per month then this is possible. Hence the specific objective of processing juice of 200,000 litres per month is attainable.
R-Realistic: The specific objective should be exact or real but not amorphous. It should be reasonable or logical.
Example one
ABC co. ltd is a shoe manufacturing company that was established in 2020. The company production manager has collected data for shoe demand level of the targeted market which have existing competitors and has found that 500,000 shoes are demanded on monthly bases. The manager has set a production schedule where by the company is planning to sell to 75% of the market round one.
This planned objective is specific, measurable but not realistic. This is because the manager has not considers the level of competition, that they are new entrants and not well known and other reasonable factors. Hence that specific objective is not realistic.
T-Time Bound: An objective should be achieved within a specific period of time. It should not be just achieved but the planner need to state the scope in terms of hours, days, months or years within which the set objective will be achieved.
Example
XYZ co. ltd is planning to increase its sales by 5% such that at the end of the month of June, it will have sold product Y. This specific objective is time bound for the time duration is one month, the month of June.
Stage two: Alternative courses of action
Definition: Course of action is the mission/strategy or tactics adopted to meet the specific objective. This is the “how” the objective(s) will be met. In other words, it is the methodology to be used to achieve the objective set. Methodology entails answering the questions of how, when, what, where, why, and who.
One unique feature of meeting the objectives, is that there may be more than one way or methods or approaches of achieving the objective.
So under the step of courses of action, there is an additional activity of identifying the best alternative of courses of action. So, out of the many courses of action, the best course of action is selected to apply in the achieving of the objective(s).
Example
Triple R Co. ltd was planning to increase the sales level of their product by 12%. To achieve this objective, there are various courses of actions, which are;
- Sales promotion
- Advertisement
- Road shows
- Out source for sales agents
- Use sales men
You can see there are five courses of action. Out of the five, there is one, which is the best. To arrive at this point, one must consider stage three.
Stage three: Gather data on alternatives
This stage involves collecting the unique statistics in relation to each course of action. This involves considering the criteria guiding the usage of each course of action.
Stage four: Select best course of action
Based on the criteria used, the best alternative is selected. This should be that course of action, which is economical, efficient and applicable.
Stage five: Implement the decision
This stage involves actual putting in place the course of action selected to solve the problem in question.
Stage six: Compare actual and planned outcomes
After implementation is accomplished, the next stage is to assess whether what was expected to the outcome has turned out to be so. This is the control stage where we identify the diversity.
