Managerial Decision Making
Using the six-step Decision-Making process:
1. Identifying the Problem and its details:
a. A teenager is asking his/her parents to buy a high-end gadget that is the trend/must-have of his/her generation (ex. I-phone or I-pad) as a present for his/her birthday b. The teenager is given an allowance of 200 pesos per school day. c. The family is living on a budget, and is cutting its cost – the parents do not want to spend beyond the allowance of the teenager. d. There are possible part-time jobs available though there are no known detailed facts on them.
Help the parents decide on the best solution to the situation/ what to do in the situation.
2. Developing Possible Alternatives:
a. Buy Gadget – Buy the gadget immediately; since it is the birthday of their child; he/she will only be a child once in a lifetime, this will show that you really care about him/her.
b. Reward System – Negotiation of a reward system for better grades or exam results. The exams results or better grades must be worth the reward.
c. Buy Gadget Substitute – Parents can by a substitute of the high-end gadget; which may look like the real thing or have the same functionality with the popular one but with a much lower price.
d. Garage sale proceeds – The parent and teenager can agree to sell old items of the teenager via “Garage Sale” and the proceeds of the endeavor will be used to buy the gadget the teenager wants.
e. Part-Time Job – The teenager can opt to do a part-time job. It may take time to gather up the money needed to buy the gadget.
f. Installment Payment of the Gadget – The parents can buy the gadget via “installment basis” and will cut-off the allowance for a significant amount which will be used to pay/help pay the monthly installment.
g. Matching Savings (50/50 savings) – The parent will match the amount of savings per day of the teenager and will deposit the amount to the bank for safekeeping, while the teenager can have the passbook and have a joint signatory with his/her parent.
h. Payment by Service – in-house part-time job of the teenager. i. Don’t Buy The Gadget – Let the teenager understand that you are living on a budget, and he/she must do his/her part. Make him/her see that the gadget he/she wants to buy is unnecessary.
3. Evaluating the Possible Alternatives:
a. Buy Gadget – “We’ll buy it! Happy birthday… we love you!” i. Positive: The parents can make the teenager know that they care for him/her. ii. Negative: The gesture will just spoil the teenager; he/she will not know the value of money/the gadget bought. iii. Negative: The Family is on a budget; expenses should only be on very necessary items – the gadget is more of a luxury the family can’t afford in this day and age.
b. Reward System – “Good Job! Here’s your Reward!” i. Positive: The teenager will give additional effort in his/her studies and other activities. ii. Positive: The teenager will value more the gadget, since he/she worked hard in studying or do well in other activities to get it. iii. Positive: The System will encourage good behavior and more productive activities. iv. Negative: What if there is no reward? The reward will be the motivation of the teenager and this will complicate relationships, especially when the parent can’t deliver the assumed reward. v. Negative: could foster an unhealthy reliance on adult opinion instead of forming their own because they are constantly looking for reaffirmation or approval via an adult mandated award system.
c. Buy Gadget Substitute – “Here… It has the same features, but it’s more practical…” i. Positive: If the Teenager can well understand...