Monday, February 6, 2012

Discussion Question 8. Possibility of decision failure

Every decision situation could be mapped on a scale of possibility of decision failure that has four positions: certainty, risk, uncertainty, and Ambiguity. Discuss each of these four decision situations by providing practical examples.

1 comment:

  1. 1. Certainty
    In this decision situation managers have all the information they need for decision making.
    For example the decision which computer to buy, the manager can get all information about the specification, features of the brand… It is also clear why they need it for what purpose.
    2. Risk
    Managers have clear cut goals and good information about it, but the outcome of the decision is subject to chance.
    Example a certain company wants to increase its sales by 25% this year. To make this decision they can get good information about the current demand for the company product, the income level of existing and potential customers, but the achievement of this goal is affected by environmental factors like change in income level, customers taste, technology…
    3. Uncertainty
    A situation where managers know their goals, but the information is not complete. In this situation managers should rely on their creativity and intuition.
    Example a company wants to achieve a market share of 25% this year. It would be difficult to know fully about competitors’ position and strategy, even though many attempts like marketing intelligence are made.
    4. Ambiguity
    Both the goal to be achieved problems to be solved is not clear. Information about the outcome is unavailable. For example let us say a certain brand bottled water may sharply decline because of the rumor from unknown source.
    This time the managers will be in problem to clearly define the problem and the alternative to take.