Describe Methods and Techniques for Dealing with Uncertainty Which Managers Can Use to Improve Difficult Decisions.

Topics: Decision theory, Decision making, Decision engineering Pages: 16 (4938 words) Published: July 13, 2011
Content Page

1.0 - Introduction3
1.1 - Specific Decision Making Models3
1.2 - Rational Decision making model4
1.3 - Vroom-Yetton-Jago decision model5
1.4 - Intuitive decision making model6
1.5 - Heuristics6
2.0 - Related Models7
2.1 - Balanced scorecard 7
2.2 - Benchmarking8
2.3 - Game Theory9
2.4 - SWOT Analysis10
2.5 - PESTEL analysis11
2.6 - Porters 5 Forces11
3.0 - Conclusion12
4. 0 - Appendices13
5.0 - References14

"Decision making under uncertainty can be a crap shot." (see p. 121) Describe methods and techniques for dealing with uncertainty which managers can use to improve difficult decisions.

1.0 - Introduction

When looking into decision making you are able to see that every decision comes with risks, many business models have been created to attempt to reduce the associated risk that is involved.

Harrison and Pelletier (2000) describe decision making as the ‘moment in an ongoing process of evaluating alternatives for meeting an objective, at which expectations about a particular course of action impel the decision maker to select that course of action most likely to result in attaining the objective’. This shows that a decision making model may need to be implanted alongside other business models to evaluate the situation. When managers are considering the options involved with decision making the following models can be used to help aid this process in different ways.

Specific Decision Making Models

Rational decision making
Vroom-Yetton-Jago decision model
Intuitive decision making model

Related Models

Balanced scorecard
Game theory
SWOT analysis
PESTEL analysis
Porters 5 forces

When examining each of these models we can see the advantages and disadvantages to a manager facing an uncertain decision problem. Depending on the type of decision that a manager is making depends if each model would be relevant in each case. Within the Snapple case study we examined William D Smithburg (the CEO of Quaker oats at the time) took the decision to acquire Snapple. I have examined each model on a broad basis in terms of what decision that the model can be used to aid, I will subsequently highlight which models I feel could have been used by William D Smithburg when making his decision to reduce the risk he encountered.

1.1 - Specific Decision Making Models

The following models show ways that decisions can be made. Suggesting structures and how decision making teams should be constructed. The models do not highlight how data is collected and presented. The related models can be used to further the knowledge of how uncertainty can be reduced in decision making in this sense.

1.2 - Rational Decision making model

Rational decision making is a process of weighing up the alternatives using a cognitive thought process. Looking at the alternative possibilities and choosing what you think is the best alternative is the basic principle of this model. There are various steps that can be followed before coming to what the decision maker believes to be the best option, Diagram 1 shows an example of the way that rational decision making can happen; it basically involves a sequence of steps to achieve the end decision.

The main advantages from using this model include that fact that there are very little costs involved; it is basically just the decision makers’ time that it is used to find the best solution to the problem. Also when a predetermined structure is created in advance it allows the decision maker to consider a range of options in a logical order.

On the other hand this model has many disadvantages. Many people who should be involved in the decision making process are not necessarily involved, for example the stakeholders. Also the information that the decision making is based on could be inaccurate or insufficient, leading to a bad decision being made. It also needs to be considered if humans...

References:  Hardin, W. (1999) ‘Behavioral research into heuristics and bias as an academic pursuit - Lessons from other disciplines and implications for real estate’ Journal of Property Investment & Finance, 17 (4), pp 333-352 Emerald [Online] Available at: (Accessed: 29 January 2011)
 Harrison, F.E. and Pelletier, M.A. (2000) ‘The essence of management decision’ Management Decision, 38 (7), pp 462-469 Emerald [Online] Available at: (Accessed: 29 January 2011)
 Investopedia (2005) Available at: (Accessed: 28 January 2011)
 Klein, J. and Weiss, I. (2006) ‘Towards an integration of intuitive and systematic decision making in education’ Journal of Educational Administration, 45 (3), pp 265-277 Emerald [Online] Available at: (Accessed: 29 January 2011)
 Leadership Champs (2008) Available at: (Accessed: 28 January 2011)
 Oh, K.B. (2009) ‘The Knowledge sharing: game and reasoned action perspectives’ Industrial Management & Data Systems, 109 (9), pp 1211- 1230 Emerald [Online] Available at:
 The Happy Manager (2010) Available at: (Accessed: 28 January 2011)
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