Evaluating Options - Business Decision Making - ثاني ثانوي

Lesson 3 Chapter 2 www.ien.edu.sa Evaluating Options As you search for solutions, analyze the trade-offs among competing needs and options. Instead of trying to find the one best solution, your goal should be to develop a good solution by evaluating, modifying, and improving on your ideas. After generating as many alternatives as you can, evaluate each one carefully. Using objective criteria helps you avoid making decisions based on emotion or snap judgments. Table 2-3 summarizes the do's and don'ts for evaluating options. case The 12 by 12 project team generated many ideas for solving the problem of declining sales at the travel company you're working at, and you recorded them on an electronic whiteboard. Now the team is meeting again to evaluate the options. TABLE 2-3: Evaluating options do's and don'ts Guidelines Examine criteria Rate alternatives Make a decision Do • Identify the criteria for your decision, such as cost, time, and usefulness • Choose more than one criteria • Assign weights to each criterion • Rank alternatives based on the criteria and assigned weights • Compare each alternative to the others Reevaluate if you have different outcomes using different techniques Choose the best alternative and use it to develop a solution to the problem • Select a good alternative instead of waiting for the ideal solution Don't • Don't settle on only one criterion • Don't assign the same weight to the criteria • Don't use a single evaluation method for complex problems • Don't be concerned if the selected alternative is not perfect • Don't make a decision you are not comfortable with QUICK TIP Decisions based on a single criterion are often unsatisfactory. Essential Elements 1. Choose an evaluation method To select a solution from the alternatives you developed, adopt an appropri- ate way to evaluate them. Is the decision small enough that you can choose intuitively? If not, consider the pros and cons of each alternative and how you can objectively measure them. 2. Select the criteria Evaluation criteria are the variables that drive your decisions. What do you need to know about each alternative to make an informed choice? Popular criteria include cost, time, feasibility, usefulness, and appropriateness for the organization. Use more than one of these when evaluating alternatives. وزارة التعليم Ministry of Education 2024-1446 95198_book_PP1.indb 51 Solving the Problem 51 07/05/2024 10:57

QUICK TIP Have a reality check. Don't assume that the rating is the absolute answer. DEFINITION Evaluation criteria: The variables that drive your decisions. 3. Weigh your criteria If your problem is complex, consider all of its dimensions as you evaluate alternatives. However, not all criteria are equally important. To take the dif- ferences into account, assign weights to each option. For example, you might be evaluating locations for a customer appreciation event for the travel company you're working at. Two criteria are overall cost and the avail- ability of an event planner at the hotel. Because cost is more significant, you could assign 80% of the decision to cost and 20% to the event planner. The weights you assign to each criterion determine how much influence each has on the final outcome. 4. Rate the alternatives You can rate the alternatives by ranking each one based on your criteria and the weight you assigned. See Figure 2-4. Another method is to compare each alternative to the others and determine which is superior. You can use an analytical hierarchy matrix to rate alternatives based on these compari- sons. See Figure 2-5. When making important decisions, use more than one rating technique. The outcomes might not be identical, but they should be very similar. If not, reevaluate your work. FIGURE 2-4: Ranking and weighting alternatives Evaluating Alternatives Assign Easy to do Each alternative = 25% Popular with customers Compared to competition. Amount of revenue points on a scale, such Points Score Points Score Points Score Points Score Total as 1-5 Score Raise tour prices 5 125 1 25 4 100 5 125 375 Drop unprofitable tours 3 Offer popular tours more often 33 75 5 125 5 125 4 100 425 3 75 5 125 5 125 5 125 450 Cut tour features 1 25 1 25 2 50 5 125 225 Multiply points by percentage for Highest total is the Total the scores each alternative (5 × 25 = 125) best alternative 52 Chapter 2 Ministry of Education 2024-1446 Business Decision Making S1 S2 S3.indb 52 30/06/2023 14:28

FIGURE 2-5: Analytical hierarchy matrix Options for Increasing Sales A B C D Row Sum Rank Add the sum A. Raise tour prices 0 0 1 1 3rd of the ratings B. Drop unprofitable tours 0 1 2 2nd in the row C. Offer popular tours more often- D. Cut tour features 1 1 3 1st 0 0 0 0 4th Is option A (raise tour prices) preferable to option B (drop unprofitable tours)? If yes, rate this 1. If no, rate it 0. Is option A preferable to option C (offer popular tours more often)? If yes, rate this 1. If no, rate it 0. Is option A preferable to option D (cut tour features)? If yes, rate this 1. If no, rate it 0. Rank the row sums QUICK TIP Ask trusted colleagues for their opinions; they might see something you overlooked. 5. Make a decision Choose the best alternative and use it to develop a solution to the problem. Do not be concerned if the selected alternative is not perfect. Complex prob- lems rarely have ideal solutions. Make sure you feel comfortable with the alternative you choose. YOU TRY IT Practice evaluating options by selecting an option and then explaining why you selected it. Complete the following steps. 1. Get ready Read the following description of a problem and possible solutions. Problem: One of the subproblems for the travel company you're working at is that its educational tours are not very popular. Possible solutions: . Create a partnership with an established educational tour company. وزارة التعليم Ministry of Education 2024-1446 Business Decision Making S1 S2 S3.indb 53 . Focus on one type of educational tour, such as cooking classes. . Add a class or workshop to every cultural and adventure tour. . Coordinate with on-site schools. 2. Now you try it Review the list of possible solutions to the problem of unpopular educational tours and then complete Table 1 or Table 2 according to the guidelines in the "Evaluating Options" lesson. Solving the Problem 53 30/06/2023 14:28

TABLE 1: Comparing options Options for improving educational tours A. Create a partnership B. Focus on one type C. Add class/workshop to each tour D. Coordinate with schools A B B C C D Row Sum Rank 1 = This option is better than the other option 0 = This option is not better than the other option TABLE 2: Ranking and weighting options Improving educational tours Each alternative = 25% Partnership One type Add class/workshop to tour On-site schools Easy to do Points Score Popular with customers Points Score Compared to competition Points Score Amount of revenue Points Score Total Score REVIEW QUESTIONS Points: Rank each option by assigning 1-5 points for each criterion Score: Multiply the points by 25 for each option 1. Cost, time, and usefulness are examples of: a. primary resources b. common problems c. adaptive techniques d. evaluation criteria 2. Which of the following should you not do before making a decision? a. Weigh the criteria b. Wait for the ideal solution c. Rate the alternatives d. Select an evaluation method 54 Chapter 2 Ministry of Education 2024-1446 Business Decision Making S1 S2 S3.indb 54 30/06/2023 14:28