REVIEW
DECISION MAKING METHODS are
important in understanding local networks
and their universal applications.
We always MAKE DECISIONS
food to eat
show to watch on TV.
kind of music to hear.
religious institution to belong to.
course to take in College.
friend’s to accept
clothes to wear
Guide questions:
How should we engage in
decision-making?
How does strategic
analysis work?
How does intuitive work?
“BUILD A TOWER GAME”
is merely an
example of how
we engage in a
in a decision
making and how
2 THINKING SYSTEMS
working in humans when making
decisions
SYSTEM 1 SYSTEM 2
Is characterized as intuitive, Is characterized as analytic,
heuristic, unconscious, rule-based, conscious,
implicit and fast explicit, and slow
INTUITIVE THINKING STRATEGIC ANALYSIS
What is Strategic
Analysis?
STRATEGIC ANALYSIS
Involves the individual’s capacity for thinking
Conceptually
imaginatively
Systematically
opportunistically
with regard to the attainment
of success in the future.
STRATEGIC ANALYSIS
STAGES OF
PROBLEM-SOLVING
The process requires OR DECISION
MAKING (“sequential”)
you to follow a pattern to
by Brim
Identification of the
creatively address a problem
situation and understand
Obtaining necessary
information
the environment in which
Production of possible
solutions
an organization is
Evaluation of such
solution
operating. Selection of a strategy
for performance
Crucial stage
in decision making
ti
lu a
a ti o n
v a
“e on
ie Ev a lu le
e g o s s i b
a t o f p
str ” or c solu t i o n s
s lyti
l y si s n a
a
An ossible “a al
d s ”
of p ions th o
t e
m at this stage we shall need this to come up with
solu
the
BEST SOLUTION
ANALYTICAL METHODS
Rubnicki and Vagner
SWOT Analysis
PEST Analysis
CBA Analysis
CEA Analysis
SEU Analysis
ANALYTICAL METHOD
SWOT Analysis
This method of analysis
considers the strengths,
weaknesses, opportunity,
and threats of alternatives
in the process of making
decisions
ANALYTICAL METHOD
PEST Analysis
The main focus of this
method of analysis is the
examination of the macro
external factors that may
affect decision making
ANALYTICAL METHOD
C OST CBA Analysis
In this method of analysis,
B ENEFIT the advantages and
disadvantages of alternatives
in a decision-making process
A NALYSIS are measured in monetary
values.
ANALYTICAL METHOD
C OST CEA Analysis
This method of analysis is used
when the values of the
E FFECTIVENESS outcomes of options cannot be
measured by monetary values
in the course of weighing the
A NALYSIS strengths and weakness of
such options.
ANALYTICAL METHOD
S UBJECTIVE SEU Analysis
The main focus of this method
E XPECTED of analysis is how to come up
with the best decision when the
occurrence of the outcomes of
U TILITY each option or alternative is not
certain. (decision depends on the interest
or preferences of decision maker)
2 THINKING SYSTEMS
working in humans when making
decisions
SYSTEM 1 SYSTEM 2
Is characterized as intuitive, Is characterized as analytic,
heuristic, unconscious, rule-based, conscious,
implicit and fast explicit, and slow
INTUITIVE THINKING STRATEGIC ANALYSIS
What is Intuitive
Thinking?
2 THINKING SYSTEMS
INTUITIVE THINKING STRATEGIC ANALYSIS
System 1 System 2
Intuitive ability to know and understand Analytic
things
without any proof or evidence
Heuristic mental shortcuts that enable Rule-based
the decision maker to
make
quick judgments or
decision
Unconcious Concious
Implicit not shown, unexpressed Explicit
USE OF HEURISTICS
Deliberate Heuristics
When the use of heuristics is intentionally used
Intuitive Heuristics
When the use of heuristics is spontaneous and
unintentional
FORMS OF HEURISTICS
ways of coming up with quick judgments or decision
“good enough”
SATISFICING settle for a choice that is good enough when we no longer have the time to gather
HEURISTIC all the information to come up with the best decision
RISK-AVERSION
HEURISTIC “the sure thing is more important”
LOSS-AVERSION
HEURISTIC “Looses are more valuable than gains”
AVAILABILITY
“A vivid memory of a related story”
HEURISTIC
“gut reaction or gut feeling”
AFFECT HEURISTIC decision was base on immediate positive or negative emotional reaction to some
idea, proposal person, object or whatever it is that we are deciding
ASSOCIATION
HEURISTIC “what a word or idea reminds a person”
SIMULATION
“imagining various scenarios”
HEURISTIC
SIMILARITY “what happened to someone else with whom we have similarities will happen to us
HEURISTIC as well”
ANCHORING-AND-
ADJUSTMENT “estimates start with one value as the basis”
HEURISTIC
