A Pyramid of Decision Approach, business and finance homework help

ALL WORK MUST BE ORIGINAL. NO PLAGIARISM.

Unit 4 Discussion

This Discussion is based on the article, “A Pyramid of Decision Approaches” by Paul Schoemaker and Edward Russo fromCalifornia Management Review. Make sure to read this article before starting the Discussion.

While
analytics is very valuable, it is not practical to fully analyze every
decision situation. In the fast pace of the business world, you will
often allow decision analysis shortcuts (also called rules of thumb) to
replace proper analysis. Making decisions based on these shortcuts
allows businesses not only to save time but also to take advantage of
the expertise and experience of those who developed the shortcuts.

The
article you will read this week is fairly long and covers various
approaches to decision making. You will first focus on the discussion on
decision analysis shortcuts that starts on page 12. Then, you will
question your own organization’s use of shortcuts and see if you can
find improvements.

Please
note that, although the article uses the terms “rule of thumb” and
“rule” in its discussion, you should not confuse this with the rules and
policies within companies that have nothing to do with decision making.
The focus here is on decision analysis shortcuts, not policies,
procedures, and so on. These also do not refer to things like using
computers to automate or speed up procedures or skipping steps. First
understanding what a rule of thumb is and is not will be the key to this
Discussion.

For
this Discussion, you will apply the steps listed on page 15. Please use
the template below in your answers so everyone can easily follow your
answers to all the questions (copy and paste to your post).

Use this template for your Unit 4 Discussion

Step 0: What is an important decision that needs to be made frequently?

a) The decision to be made:

(Describe an important decision that needs to be made frequently in your business.)

b) The analysis:

(Describe, if time was not an issue, what in-depth analysis would be required to make this decision)

(Refer
to Exhibit 1 in the article for many examples of decision situations
and decision shortcuts from real life. Notice that all these examples
would require in-depth analysis, but managers are using “rules of thumb”
to accelerate the decision at the cost of potential mistakes. Also note
that these are all decisions, not simply rules or procedures: How much
to mark up prices, how many rooms to overbook, how to evaluate the
quality of an article, etc.)

Step 1: The decision analysis shortcut

The decision analysis shortcut (rule of thumb):

Describe
the rule of thumb that is being used to make this decision without
conducting a full analysis every time. If there is not one, what rule of
thumb (decision analysis shortcut) would you recommend to be used to
make the decision without a full analysis? Justify your suggestion: Why
should your rule of thumb work?

Make sure that your example is designed to replace a lengthy analysis in a decision situation.

Step 2: Success example

Give
an example of where this decision analysis shortcut comes close (or
would come close, if the rule is new) to the correct decision.

Step 3: Failure example

Give an actual example of where it failed badly and explain why (or where it may fail badly, if you are suggesting a new rule).

Step 4: Improvements

Suggest
possible improvements to the decision analysis shortcut. How can
analytics help in avoiding failure? (You can skip this step if the rule
is new.)

Step 5: Testing

Describe how the new decision analysis shortcut would be tested before being implemented organization-wide.