Decision alternatives criteria and weights

how to make a decision based on criteria

1. Management and Decisions Dr. Joseph Riad

2. Certainty, Risk, Uncertainty, Ambiguity Certainty All the information is fully available (import wheat) Risk Decision has clear goals Information is available Future outcomes are subject to chance (new Medicine approval) Uncertainty Managers know which goals they wish to achieve Information is incomplete May need to develop creative alternatives (fold phones) Ambiguity Goals to be achieved or the problem to be solved is unclear Alternatives are difficult to define Information about outcomes is unavailable (kid choosing a career)

3. Decision Making Choosing an option between a number of alternatives

4. Steps Identification of a problem/opportunity Identification of decision criteria Allocating weights to criteria Development of alternatives Analysis of alternatives Selection of an alternative Implementation of the alternative Evaluation of decision effectiveness

5. Problem/Opportunity: A company wants to increase market share and revenue by launching a new product.

6. Decision Criteria: Market demand: The potential size and growth of the target market. Product feasibility: The technical feasibility of developing and producing the product. Competitive landscape: The strength and number of competitors in the market. Financial viability: The potential profitability of the product, including costs, revenue, and return on investment. Resource availability: The availability of necessary resources, such as personnel, equipment, and funding.

7. Weights: Market demand: 40% Product feasibility: 30% Competitive landscape: 20% Financial viability: 25% Resource availability: 15%

8. Alternatives: Option 1: Launch a high-end, premium version of the product. Option 2: Launch a more affordable, mass-market version of the product. Option 3: Partner with another company to co-develop and market the product.

9. Analysis: Option 1: High market demand but high development costs and potential for limited market penetration. Option 2: Lower development costs and potentially larger market reach, but may require sacrificing some features or quality. Option 3: Shared risks and resources, but potential for conflicts and loss of control.

10. Selection: Based on the analysis and weights assigned to the criteria, the company decides to launch a more affordable, mass-market version of the product. Alternative Market Demand (40%) Product Feasibility (30%) Competitive Landscape (20%) Financial Viability (25%) Resource Availability (15%) Total Score Option 1: High-end 9 7 5 8 6 8.3 Option 2: Mass-market 10 8 7 9 8 8.8 Option 3: Partnership 8 6 8 7 7 7.5

11. Implementation / Evaluation The company develops a detailed product launch plan, including marketing strategies, production schedules, and distribution channels. After launching the product, the company monitors sales, market share, customer feedback, and financial performance to evaluate the effectiveness of the decision. They may make adjustments to the product or marketing strategy based on the results.