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Week 2 of Managerial Decision Making

by: Anna Notetaker

Week 2 of Managerial Decision Making 3890

Marketplace > Middle Tennessee State University > 3890 > Week 2 of Managerial Decision Making
Anna Notetaker
GPA 3.62

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About this Document

This includes Topic 2 of The Managerial Decision-Making Process as well as study notes for the Quiz for Proctor and Gamble.
Managerial Decision Making
Prof. Jean Wilson
Class Notes
mtsu, Management, Marketing, business, decision making
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This 3 page Class Notes was uploaded by Anna Notetaker on Sunday January 31, 2016. The Class Notes belongs to 3890 at Middle Tennessee State University taught by Prof. Jean Wilson in Spring 2016. Since its upload, it has received 154 views.


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Date Created: 01/31/16
Topic 2: Managerial Decision Making Process  Decision Making is defined as dynamic, covers a span of time, continuous, direct and control the nature, degree, and pace.  Steps of Decision Making is the following: 1. Formulation of the Problem 2. Search for Alternatives 3. Analysis of Alternatives 4. Selection of Alternatives 5. Action 6. Evaluation  Take Corrective Actions as Necessary 1. Reorder our evaluation 2. Reschedule your work flow 3. Reassign your personnel 4. Renew the search/new alternatives 5. Revise objective (last resort)  Objectives constitute the foundations for rational decision making (must set goals). Attainment is the ultimate measure of decision success. S – Specific M – Measurable A – Attainable R – Realistic T – Time Bound  Searching for Alternatives: 1. Structure of the Organization 2. Balance Cost of Additional information, Amount of Perceived Payoff, and Own Level of Aspiration.  We stop seeking information when the cost is higher than the benefits.  Alternatives result from the search and are evaluated by : 1. Judgement (Easiest to Use) 2. Bargaining (Best with Controversy) 3. Analysis (Least used)  You never ever want to have only two choices in your decisions. Three to five alternatives are the best. Five minimizes overlooking valuable data and the cost would increase. Less than three would make you be a fool.  Risk is based on the following: 1. Probability 2. History 3. Estimate  Optimistic = Max the Max, Pessimistic = Max the Min, & Minimize the Max Regret = Min the Max.  As a company, you must have logic behind your choices. QUIZ INFORMATION:  Quiz is over Proctor and Gamble, Chapter 3 of Management Mistakes & Successes.  Consumer-Product Marketing – Merchandise or other items of common or daily use, ordinarily bought by individuals or households for private consumption. You must try to make the individuals interested in buying all the time.  P&G had carefully nurtured its key brands in many categories with heavy advertising.  Even with low sales, gross margin could still be maintained if prices could be raised without demand being drastically affected, but this did not happen for P&G.  L. G. Lafley’s strategy was to move toward beauty and premium household products with higher profit margins. He raised the quarterly dividend by 10% in keeping with the 53 years streak of increases.  P&G’s sheer size made it difficult to quickly respond to competitive threats such as lower-cost products.  Lafley feared that high-level executives passed over for a top job would leave the company while young enough to become CEOs elsewhere. P&G were known as the “training camp” for other firm’s executives.  The competitive environment was at a critical junction. Some questioned if the company had become too big for rapid growth. P&G started reaching more customers by widening the price range of its products.  Store Brands: They offer the retailer a better markup because the store is not burdened with advertising and other distribution costs. The P&G was affected particularly hard because its big brands had long dominated due to heavy brand advertising over decades. The price differential with store brands became more attractive than ever, both to the consumer and to the merchant. Consumers had become more knowledgeable than ever, and many were now skeptical of advertising claims. Lafley feared that people who switch might find private labels give them 95% of the satisfaction of a P&G brand, and they might decide that’s good enough.  A new product generally takes some sales from similar older products. P&G stated that they must introduce new products (advanced) or someone else is likely to do so in the future and be more profitable.  P&G’s dilemma in bringing out new products of somewhat lower quality and lower price to meet the changed consumer demand, the best hope was that the lower-priced product would be more competitive and have an acceptable rate of cannibalization.  The decision to carry a leaner stock and assortment should be weighed against the greater attractiveness of a wider assortment and more choice given to consumers.  Robert McDonald planned to reduce the levels of management to seven levels from the present nine levels. It reduces the cost, improves productivity and enhances employee satisfaction.  P&G is the world’s biggest advertiser and it is spending about 8.7 billion annually on mass media advertising and promotions.  Research & Development may have its most value in developing low-priced goods for emerging markets and making products more affordable.  Diversified approach to promotion is keeping alive the idea of promotion from within, but welcoming outsiders of particular experience and fresh ideas.


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