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However, WCM produces no direct conservation. To address the second possibility, CFS was advised that a second iteration with the process would be helpful to validate the preference assessments, or to indicate where they should be revised. In any case, the current results of the MADA process have provided CFS with powerful insights and supporting data for presenting the alternatives for energy conservation to the administration for further consideration.

Given the increasing complexity of decisions facing corporate managers today, managers need a variety of tools to assist them with thinking rationally about their decisions and ultimately to provide support for their decisions. In particular, organizations are seeking a more structured framework for making decisions related to sustainability issues.

This article focused on the decision process as managed by a single decision maker. An interesting extension beyond the scope of this paper would be to consider the decision making process as performed by groups, wherein individual preferences between group members would be weighted through the tradeoff process. Furthermore, the CFS goal of reducing electricity by 10 percent was evaluated in isolation in this case. Chicago: University of Chicago Press, Keeney, and H. Dyer, P.

Fishburn, R. Steuer, S. Zionts, and K. Salminen, and J. How will financial markets be influenced by such political turmoil and how can investors prepare? Since , the stock market environment has changed in ways that make it more important than ever to understand the relationship between politics and stock market behavior. Unlike the article that did not address the above in detail, this article will attempt to do so.

What accounts for owners selling items for more or less than they are worth? Do sellers and buyers see the value of an item in the same way? Can a third-party agent impact the selling price of an item to net the seller a higher profit? This article offers some surprising answers. An implicit challenge is to coordinate the efforts of groups with different interests to realize expected gains. This means that acquisitions quickly go from numbers to considering the impacts on people, as achieving synergy requires clear communication of the implications of an acquisition to those impacted.

Decisions involving issues of sustainability tend to include an array of objective attributes along with highly subjective value judgments. Managers must find a way to factor qualitative attributes such as environmental, social, and ethical impact into the decision-making process. The Digital Age has the potential to be as disruptive and transformative for us as the Industrial Revolution was for our ancestors; that disruption could threaten our capitalist system and our democracy. Rapid technological development in AI has led to speculation of a catastrophic demise of the auditing profession.

The primary weakness in this use of AI for auditing is that machines initially learn from flawed systems: humans. To support startups and new ventures in the digital space, ICOs and STOs have the potential to streamline, decentralize, and disintermediate the capital raising process, creating advantages for both entrepreneurs and investors. Multi-Attribute Decision Analysis Managers who want a structured approach to decision making often turn to Decision Trees, a visual decision support tool that maps out choices and their probable outcomes. The MADA process, in its simplest form consists of four stages: [1] Framing of the decision and identification of the goals and objectives to be achieved by the decision maker Identification of all decision alternatives and any related attributes that address the decision making objectives Specification of preferences, both for each of the individual attributes and between the attributes in the framework Ranking of the decision alternatives according to the specified preferences, given the attribute data for each of the alternatives In the above example, if the manager must decide between several projects, some of which provide substantial electricity savings but less visibility, and others that provide smaller amounts of electricity savings but more visibility, then the preference for electricity savings versus visibility must be considered explicitly.

Multi-Attribute Utility As mentioned above, the different attributes in a multi-attribute decision making problem are likely to be measured in different units. Share Facebook. Authors of the article. Author's profile. Warren J. Hahn, PE, PhD, is an associate professor in the decision science discipline in the Graziadio School of Business and Management at Pepperdine University, where he teaches graduate business courses in applied statistics and management science.

His research interests are primarily in the area of numerical techniques for solving decision-analysis problems and quantifying the effect of operational decision-making on asset value. Samuel L. Seaman, PhD, is a professor in the Decision Science discipline in the Graziadio School of Business and Management at Pepperdine University, where he teaches graduate business courses in applied statistics and evidence-based decision analysis.

Decision Trees

His research and consulting interests generally focus on the application of mathematical models to practical dilemmas in business, health care, and the not-for-profit sector. His work has focused on provided market intelligence and strategic guidance for responsible companies in cleantech, online media, e-commerce and food industries. More articles from Volume 15 Issue 2. VIDEO — Wall of Worry: Elections and the Markets is shaping up to be the year of global political change with important changes in the government in Russia, France, Italy, and of course the upcoming presidential election here in the United States.

The Four-Year U. Presidential Cycle and the Stock Market Since , the stock market environment has changed in ways that make it more important than ever to understand the relationship between politics and stock market behavior. By Mathew S. Beyond the Numbers An implicit challenge is to coordinate the efforts of groups with different interests to realize expected gains. By David R. King, PhD and Richard W. Making Decisions with Multiple Attributes: A Case in Sustainability Planning Decisions involving issues of sustainability tend to include an array of objective attributes along with highly subjective value judgments.

By Warren J. Modernizing Capitalism: Saving the American Dream The Digital Age has the potential to be as disruptive and transformative for us as the Industrial Revolution was for our ancestors; that disruption could threaten our capitalist system and our democracy. The research findings of the questionnaire will illustrate that the digitalization of supply chain processes is in the scope of managers and consultants, to reach higher efficiency by increased turnover or by reducing costs.

The result of this paper verifies an improved decision process by usage of digital features, but the capability of the entire digital possibilities is not fully achieved yet. Nowadays the megatrend of digitalization creates new challenges for the entire business environment. These changing elements enforce organizations to reconsider their way of doing business, even to rethink their entire business model.

Digitalization is today and will be in the future a key driver for change in organizations and especially the process how decisions will be made. IT leadership, as one important function in an organization, is currently forced to make major changes, as digitalization of products and services is transforming traditional business models across industries. In this new context, the focus on the wide area of decision-making theory is quite important, from a more rational view to a more emotional view. Analyzing decision making through the view of digitalization, completely new opportunities and approaches will appear in a close future.

Setting the scene for the current state, a questionnaire was made with business and scholar professionals to understand the lack of opportunities and execution level of organizations. The strategic decision area of supply chain seems to be a fascinating field for research. The SCOR model is an accepted model of scholar and business, hence worth to be analysed. Not only based on data, moreover targeted on markets, organizations and processes digitalization will also deploy its full value to businesses and industries. The new era of digitalization has already started and shows the first step of a new business world with a change in the division of work.

In a first step, an automated computer as we understand today took over this task and increased quality and efficiency of this process. Since then, the automation of our world was ongoing and influenced by computers and machines. Crucial for the development was the definition of rules for computers because computers are perfect in following algorithmic rules. Brynjolfsson E. Further actions took place to develop more feasibilities of machines, i.

Apple iPhone is now with the software Siri able to understand and direct the user. It is a real quantum leap because language automatization and transformation of it into instructions was a giant step for the industry. Referring to the effects of digitalization, this trend will completely change the way of making business and making decisions. Flexibility and transformability are key attitudes of successful organizations in the future and drive them on the road of digitalization Bauer W. Digitalization will have an effect on customer structure and behavior, increase the efficiency of operations including their supply chain and at the end may change the entire business model.

Westerman G. It is important to understand the logic of digitalization and to realize the four levels of transformation. These four levels have to be in scope of the decision maker BDI, Digital data big data Due to recording, processing and analysis of mass data, high-quality and more predictable forecasts and decisions are possible in organizations. The structure of big data is Goes P. Big data is a huge trend in digitalization because the usage of data is important for an organization.

A strong increase of data traffic had happened and will further increase; in the future driven by digitalization, e. This traffic is permanently increasing, and all devices are moving toward mobile and smart functions. The latest trend of data shows the movement from big to smart data which means data including utility, semantics, data quality and security S.

Automation The traditional trend of automation is an ongoing process pushed by new technology and the need for efficiency to enable a competitive cost base.

Decision Making Strategies for Leaders | London Business School

The combination of traditional work and technology with artificial intelligence will enable autonomous work in self-organization systems with high quality and high efficiency. As an effect, production speed will increase and unit costs will drop. Automation has different aspects of realization. First, the work volumes between man and machine are changing. Second, the trend toward a higher automation is still ongoing, up to entire fully automated factories without human beings.

Today a work flow from machine to machine without human interaction is possible and works without variances on a repeatable high-quality level. The third step, artificial intelligence, is a self-learning system, with a set of different reactions based on environmental conditions. As an example, one new technological process is rapid manufacturing, which means that traditional production types will be replaced by new technology. This new technology uses direct digital data for production, without a tooling procedure. Cost intensive tools are replaced by new manufacturing applications. These procedures are very flexible at an acceptable cost level and permit small batches.

Different possibilities of 3D printing enable a wide range of applications. Bopp F. Integration Connecting the entire value chain by the high-quality broad band will enable synchronized supply chains with shorter production cycles and faster innovation cycles mobile or fiber opic net.

An important integration in the era of digitalization is a deeper collaboration in the entire supply chain. Based on a more flexible consumption behavior a more agile supply chain has to deliver this flexibility. As a result, a strong cross-company collaboration is a must, and online information has to be exchanged between the different entities. Cross-linking of organizations and their IT systems are the requirement for an efficient supply chain.

Wannenwetsch H. Digital customer access New competitors, new services, and new transparency will increase competition and market position of companies and brands.


  • Stop Making Plans; Start Making Decisions.
  • Introduction.
  • How Decision Making Impacts An Organization?
  • MG Analytics for Strategic Decisions.

For customers, the next opportunity is just one click away. The consumer and customer is again back in the center of scope of organizations. In the recent years, consumer behavior and hence customer activities changed dramatically toward a less loyal, more flexible and quick response relationship. Increased mobile services, e. Hence this has to be the mantra in an organization.

Starting with mobile phones, developed to smart phones, now we see smart TVs and smart watches. Also, housekeeping is going smart, with refrigerators or washing machines, even energy consumption is steered with smart technology Kreutzer R. As Porter describes, new smart products for consumers with three core elements: physical, smart and connectivity. Decision theory is a wide area in science, with a long tradition. The first idea of decision theory reaches back over hundreds of years and is still relevant in the present.

Rational models were discussed from the neoclassical economists e.


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Adam Smith or Max Weber with a view on rational behavior of agents which maximize their utility — the homo oeconomicus. A more scientific approach of Pascal and de Fermat shows a calculation of probabilities and Bernoulli laid the foundation of risk science by examining random events. The most popular theory is still the theory of games and economic behavior von Neumann J. Consumers strive for a maximum utility or satisfaction and entrepreneurs strive for maximum profits.

The opposite of the rational view is a behavioral view on decisions. In the late ies, Simon discussed the theory of bounded rationality, which means a certain influence of human attitudes with not pure rational decisions Simon H. A deeper view in the psychology science shows that theories on the behavioral economy are currently quite popular because human behavior is one part of organizational actions. Also, Reinhard Selten contributed research to the field of behavioral decision making.

In the classical field of the economical view on decision theory, a rational, mathematical founded approach is discussed. The process of pure calculating to find a maximum of utility or profit is a typical rational procedure. In the dimensions of decision fields, the alternatives are significant to analyze. There is only a decision problem if there are minimum two alternatives. Hence a determination of these alternatives must be reflected in the decision model. In the next step, an evaluation of these alternatives must be done.

These consequences will lead to a result of the alternatives into the decision model. Important figures of the decision maker are defined as targets, these values are the result. Laux H. For a structured process, the environmental conditions are very important. Measures are not manipulable by the decision maker, these measures are called decision relevant data.

These data are no variables for the decision maker. These characteristics are decision relevant environmental conditions. Figure 1. Structures of Environmental Conditions based on Bamberg G. A decision structure under certainty means, that the decision maker has the real condition of the alternatives, hence all relevant information for the decision is given. Therefore the result is known and alternatives are certain.

How Decision Making Impacts An Organization Case Studies

In reality, quite often decision models are formed as models of decision under certainty because the setup and the usage of this model type is easier to handle Bamberg G. A decision structure under uncertainty means, that the decision maker has minimum two possible alternatives, but not all relevant information for a decision are given. Therefore the result is not known and alternatives are uncertain.


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  8. In the case of uncertainty, there are two more possibilities. This differentiation of the environmental conditions is important to define; especially decision making in the context of globalization and digitalization. While globalization creates more complexity and uncertainty, a more sophisticated model for decision making is substantial for an organization.

    In terms of digitalization, a need for algorithmic structures is a must, computers need a mathematical logic to calculate a result for the decision. Significant developments in decision theory took place over the recent decades, though a trend to a behavioral approach was supported by psychological science. An outstanding contribution to the development of behavioral economics was made by Kahneman and Tversky.

    Describing decision theory with a strong psychological view makes a decision more emotional than rational. Depending on the activated system in the mind; Kahneman named it system 1 and system 2. The operations of system 2 are often associated with the subjective experience of agency, choice, and concentration.

    The human structure is based on usage of system 1, only if necessary, system 2 is activated. Kahneman D. This concept of system 1 and system 2 set the basis for a human behavior of decision making, which absolutely defers from a rational decision view. The fact that a lot of decisions have both elements, a risk of loss and an opportunity of gain, effects a decision to gamble or to deny. Focussing on loss aversion Kahnemann D. As a result, people deny this option and this is controversial to a rational choice, with a pure calculation of probability. Risks are undervalued or not in scope of the decision maker Kahneman D.

    Following the process, the maximum utility for the decision should be made. The main question is, if in an organization this strict process will be executed. In an organization with different interests of members, the question of a maximum utility for the decision problem is to be questioned. In an organization, there is never a perfect achievement of targets reachable. The environment of the organization limits the alternatives and the maximum of utility Simon H. This opposite view to a rational decision process raises the question how the decision process in organizations is really made.

    Objectives of the study

    Are organizations as rational as expected or are they emotional driven which have effects on decisions. The behavioral influence in organizations has to be respected and the result is based on this set up March J. Taking the described topic into scientific context, the research question is asking for a relationship between an intelligent digital setup for decision making and the quality of the strategic decisions. The intelligent digital setup means a well-customized system for an organization which enables a more efficient process.

    The type of customizing has the respect the industry, customers and the organizational set up of a company because every single organization has its own perfect fit in a competitive system. The quality of the strategic decision has to be taken into context to the origin of the decision. A profit improvement is not necessarily an indicator of a quality increase of a strategic decision because not all strategic decisions are directly linked to profit increase vice versa sometimes profit happens by coincidental effects. The main hypothesis of this paper will analyse the dependency of the efficiency of strategic decisions and the digital set up for decision making in organizations H0.

    Figure 2. The generic dependency model with the relevant variables is displayed in figure 3 and the basis for the subsequent research model. In the further analysis of the hypothesis, the generic model has to be set in context with a real business case, to make assumptions and the prove these hypotheses.

    The research model for this paper is based on the above mentioned generic model. The different values of the variables itself are quite interesting, but also the dependency of the variables. The definition of the independent variables is, as described in figure 4, the digital process of data transfer from customer to supplier, then into the material management, production planning, and inventory management system.

    Case Example Using the Eight-Step Ethical Decision Making Process