Introduction
The report is intended to conduct the critical analysis of the management decision making process to identify and explore the sources of the information and data for the decision making and what tools and techniques can be used by the management to make decisions. For this purpose, the report is going to analyze the issues in the context of the case of WM Pressings Company and OIL project.
WM Pressing Company is a company that manufactures pressed steel and parts of aluminum for the companies exist in the automotive industry. The company has faced the poor quality performance as the high number of recalls of the products to the company from the customers. For this purpose, the company on investigation has found that from its various presses, Press No 2 is the major cause of the problems and difficulties (Lecture 12).
The company is needed to completely refurbish Press No 2. For this purpose, the company has selected four companies to facilitate the solution for Press No 2. Now, the company is required to select any one of these four companies to conduct further process. Therefore, the paper is going to analyze the decision making process and to make decision for selecting a company to solve the problem in the production of WM Pressings, while focusing on the cost to solve the problem.
Limitations of Using Heuristics to Carry Out Decision Making With Multiple Objectives
Issues Arise When Making Decisions with Multiple Objectives
Before going to analyze the issues arise in decision making, it is important to understand the term decision making in different context. The study has stated that decision making is like an agent that behaves and act differently in different context according to the resources provided and time to complete the objectives and goals. However, in the real world, the standard situation is to make decision with multiple objectives, with multiple criteria and goals. While making decisions, there are always more views and opinions (Della Croce, Tsoukias & Moraitis, 2002; Hahn, Seaman & Bikel, 2012).
The study has found many technical and conceptual problems and issues in decision making under various criteria and objectives. First of all, it becomes difficult to accurately define the objective of the solution that means why and for what the solution is going to be provided etc. It has also stated that the decision making is become technically more complex and develop more problems in multiple objectives and criteria (Della Croce, Tsoukias & Moraitis, 2002).
What are heuristics?
Since, the problems have identified in decision making under the multiple objectives, the researchers and field experts have been involved in finding the solutions for the decision making for immediate and multiple objectives and goals. Heuristic is one of these solutions and is known as a technique to solve the problems with immediate objectives and goals. Heuristics in decision making are known as common, simple and efficient techniques for judgments. By many studies it is proved that heuristic decision making is completely different from rational decision making. According to one of these studies, due to the complexities in situation and limited information available, it becomes difficult to remain rational and persuade humans to take short cuts and biasness in decision making (Asadullah & Kundi, 2013).
However, before going to use heuristics for making the decision for WM Pressings Company, it is important to understand the impacts on the decision.
Pros & Cons of using Heuristics
There has been a long debate about the use of heuristics in decision making. Therefore, there are many pros and cons of using heuristics in decision making in the arguments of the researchers and scholars. Heuristics help in making quick decisions. Furthermore, heuristics help in making more efficient decision in simple situation rather than creating complexities. However, on the same side, many researchers have argued that heuristic decisions are resulted in biasness that sometimes impact negatively. There are more chances of errors and mistakes in the use of heuristics in making decisions (Lau & Redlawsk, 2001; Schermerhorn, 2009). It means making decision with the use of heuristics can lead WM Pressings to face errors and problems in future with the expected results and outcomes to the solution of the problem with selecting a company. Therefore, it is more relevant to use Smart and rational process.
SMART Process for Decision Making With Multiple Objectives
The information given about the four companies can be used effectively to make more rational decision to select one of these companies for providing solution to the company for its manufacturing issues. The information given is mainly focused on the cost of hiring each company and their benefits in terms of four factors i.e. reliability, performance, changeover time and environmental performance. Keeping the given information in mind, cost benefit analysis is the most efficient method to use for decision making (Fulop, 2005).
Analysis on the information given in the case about the press refurbishment
Based on the given information in the case, the SMART process for decision making is going to be conducted. For this purpose, the cost and benefits analysis is the most essential technique. Using the information, the benefit assessed as follows:
The weight of the given benefits is normalized using the given weights in the case as follows (Lecture 9, part 1):
Based on the normalized weights, the benefits of each company are aggregated as follows (Lecture 9, Part 1):
The cost of each company is already given in the case and the benefits are normalized as follows (Lecture 9, Part 1):
Using the above information, the cost and benefits are plotted as follows (Lecture 9, Part 1):
Identifying one of the four companies
Based on the above cost and benefits analysis, Calthorphe Company has to be selected for WM Pressings Company out of the four companies selected.
Recommendation with Justification
It is important to understand that which company is recommended and why the company is to be selected out of the four. Therefore, the recommendations are made with justification of best cost and benefits with the selected company.
The company offers that best cost performance
In terms of cost performance, Arndale is the company that is offering the best cost performance out of the four companies selected from the market. It is offering the lowest cost among all other alternatives i.e. £160,000, however, the highest cost is £240,000. However, Bell and Calthorphe are offering the cost in between the lowest and the highest. Therefore, if cost is more important, then the company can select Arndale.
The company offers the greatest benefits
Despite of the cost, benefits are also important for the company. Among all companies, Dry stone is offering the greatest benefits; however, Bell is completely out of the trend offering lowest benefits. Therefore, if the benefits are more important, then the company can select Dry stone.
Balance costs vs. benefits to make the right decision
If the cost and benefits both are important for the company then the company is needed to select the company that is most appropriately balancing the cost vs. benefits. Arndale is offering the lowest cost but not greatest benefits, dry stone is offering greatest benefits but highest cost while, Bell is completely out of trend from cost to benefit balance. Therefore, it is recommended to the company that for the balance between cost and benefits, calthorphe is the best option offering average cost and average benefits among all other alternatives.
Role of Making Decisions in an Ethical Manner in Successful Business
With the growth in the businesses in the context of corporate responsibility, the concerns about the ethical issues and challenges have been increased. The ethical issues are very important for the organizations due to their major role in the reputation, image and performance of the businesses. Now, the ethical issues are considered the most important factor in the success of the organizations in the contemporary world. Not taking the ethical issues and concerns seriously can cause the company to face various issues and challenges from both external and internal factors such as legal pressures, damaging environment challenges, damage to the reputation and image of the company etc (Jamnik, 2011).
The management while making the decision must focus on the stakes of all the stakeholders. The studies have found that the decision making in the presence of many stakeholders causes tensions and serious issues. Focusing on the self interest of the management can damage the moral factors. The study has found that moral decision making with the effects on the stakeholder is directly influenced by the culture of the organization (Jones, Felps & Bigley, 2007).
In case of WN Pressings, the ethical issues are more concerned with making the fair decision about selecting the firms with equal benefits to all the stakeholders. Biasness and unfairness in making decision could cause the company to face various serious challenges. If the company would select the company with the highest cost, focusing on the benefits, it will be unfair to the investors to face the high cost that might impact on the overall success of the company. Apart from this, if the company would select the company randomly, it would be unfair and unjustified decision for other companies that might damage the reputation of the company for the future work from the companies in the market.
Other than WM Pressings, Siemens has faced the ethical issues while making the decision of using the school district funds inappropriately and thus, the company fired the chief financial officer and superintendent (Quast, 2011). It means that unethical decision making can cause various issues and problems to the organization.
Reflection
During the activities in OIL project, I have used multiple tools and objectives for the decision making in different activities. However, the major activity was the assessment of Jaguar Land Rover Company that was needed to decide about their global expansion strategy.
For this purpose, I used rational tools for decision making for the global expansion of the company. However, for making decision to select the company to write about the best performing companies in the world, I used heuristic tools for decision making to select the firm to write about.
Using rational tools for Jaguar Land Rover Company, I have learned that the tool is very effective to make the business decisions as the complete analysis of the given information about the international markets and external situation helps to decide the effective global expansion strategies for the company. I have found that rational tool helps in reducing the risks in decision making.
Decision making is a very important aspect for the business firms these days and for this purpose, it is more relevant to collect the information for the analysis to make the accurate decisions with justifications. Therefore, I will further use the rational tools for decision making for the logical and justified decision, mainly in business cases. However, different rational tools can be used in future as for now, I have used external environment analysis; however, in future, I might be used cost and benefit analysis, Smart process and many others based on the information required in multiple objectives and criteria.
Conclusion
Hence, the decision making is very important process within the firms that requires a complete process to make accurate and reasonable decisions in different criteria and objectives. From the case study of WM Pressings and OIL projects, it is concluded that rational decision making is more significant in multiple objectives rather than heuristics and quick decision making. The use of information with proper justification is helpful for the companies to make the right decision in different situations such as the company out of the alternatives is being suggested to select calthorphe because of the proper balance in cost and benefits. Though, the company can change the decision with the objectives such as if the objective is to reduce the cost, the company can select the cost performing company. Therefore, the decision making is more aligned with the objectives.
References
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