QUANTITATIVE AND QUALITATIVE FACTORS IN DECISION MAKING

Quantitative Factors

-how much is it going to cost
-how much are we going to sell
-you have make someone redundant(it isn't nice but it is for money)
***Manchester united until very recently was bought by one person and this person controll the whole team, isn't good idea because supporters don't like it..
Decision Trees = The Process
economic growth rises....0.7
economic growth declines....0.3
0.7 x € 300.000 = € 210.000 0.3 x € 500.000 = € -150.000........................a net benefit figure of + € 60.000
if the probabilities change,
economic growth rises....0.5
economic growth declines....0.5
0.5 x € 300.000 = € 150.000
0.5 x € 500.000 = € -250.000..........................in this instance the net benefit is - € 100.000 the decision looks less favourable !!

Qualitative Factors

-Qualitative factors look to take account of these other issues that may influence the outcome of a decision
-Can be wide ranging and especially need to consider the impact on human resources and their response to decisions

SWOT

A decisions (for example, investment in a new production plant) could be considered not only in financial terms but also to apply other techniques of decision making to look at wider issues:
A SWOT analysis might be part of this:
strengths,weaknesses,opportunities,threats

PEST

Might also need to factor in other external issues that might influence the decision making process which can be summarised as:
–Political
–Economic
–Social
–Technological
Political could be in its widest sense, e.g. the internal politics of a firm as well as the national and international political effect
The decision to site a series of wind turbines in a coastal area might be justified on financial grounds but:
–What is the reaction of the local community?
–Does government policy support such planning developments?
–Are there social impacts
– e.g. noise pollution, damage to eco-systems, etc?
Such factors may make the difference between success and failure

Human Resources Management

Impact on a firm’s human resources is essential to consider, in particular the effects on:
–Motivation
–Morale
–Recruitment and Retention
–May be difficulty to assess and measure
–May need to distinguish between short term effects and long term

Decision Making

Eventual decision may rest on the balance between the perceived effects of quantitative and qualitative. If the long term effect on the workforce for example was to reduce productivity or increase absence because of the impact on motivation and morale, the fact that a decision makes financial sense may be shelved! Qualitative by its nature, therefore, is very subjective