The Importance of Analysis and Analytical Skills to the Manager Making Decisions in Business

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The importance of analysis and analytical skills to the manager making decisions in business

Student Name: Shuotong Gong

Student Number: 21044073

Course: Managing Desicions

Course leader: Mohanty, Sanjeeb

Table of Contents
Introduction3
Frameworks for structuring decisions4
Evaluation of decision making methods7
Use of decision structuring frameworks in organisations10
Conclusion12
References14

Introduction
Decision making in organisations is among the most important function of any manager. Decisions range from simple procedural decisions to complex strategic and operational decisions. Care must be taken to ensure that the decisions made address the problems identified and that they enhance the overall performance of the organisation (Russell, 2006). In management, the suitability of decisions determines the extent to which an organisation can be considered to be effective (Hill, 2000). This calls for an analytical approach that enables the managers to think through the options available carefully before making a decision on which direction is to be taken.

A typical decision making process in organisations comprises of 8 sequential steps which start with the monitoring process. The second stage involves the identification of the problem and is followed by the setting of objectives (Barnes, 2008). After this, efforts are made to better understand the problems and this stage is followed by the generation of options for dealing with the situation. Subsequent stages involve the evaluation of options generated and the selection of the most appropriate option. Various models have been developed in an effort to facilitate a structured approach to decision making with most models requiring some level of analytical competence of the manager (Barnes, 2008). Decision models help in coming up with simulations that help the manager to be better prepared for various situations that may arise from time to time. The models also help in evaluating the full implications of the decisions to be made and this aspect helps in ensuring that the best decisions are made at a time (Krajewski, 2005). Some of the most commonly used frameworks include the decision tree and project planning models. This paper focuses on the frameworks for structuring manager decisions and thereby highlights the importance of the application of analysis in decision making in organisations.

Frameworks for structuring decisions
The decision tree and the project planning approaches are among the most common frameworks considered in structuring management decisions.

The decision tree provides an avenue through which managers can lay out the options available and predict the outcome of such options (Yan, 2002). In other words, they help in coming up with simulations which capture the risks and rewards involved in any of the options under consideration. For instance, an organisation wishing to achieve growth in its market share in the organisation would be faced with certain options which may vary from new product development to market consolidation strategies (Yan, 2002). In order to determine which options would be most suitable for the business, the manager would need to come up with a decision tree which outlines the outcome of each of the options. The decision tree would outline the outcomes in three categories: good, moderate and bad with the third category often signifying the risk involved should such a decision be made. This balanced A typical decision tree appears as shown in the figure below:

[pic]
Source: Hill, 2000

In the estimation of the values of the options involved in a decision tree, probabilities of occurrence are used with the weighted totals taken as the value of the options in question (Nayab, 2011). This framework requires that the manager be aware of all options available and this ensures that the best option under the circumstances is arrived upon....
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