Quantitative and qualitative factors in decision making

Quantitative Factors

Considerations relevant to a decision that can be measured in terms of money or quantitative units. Examples are incremental revenue, added cost, and initial outlay.

Qualitative Factors

Considerations in decision making, in addition to the quantitative or financial factors highlighted byInteremental Analysis. They are the factors relevant to a decision that are difficult to measure in terms of money. Qualitative factors may include: (1) effect on employee morale, schedules and other internal elements; (2) relationships with and commitments to suppliers; (3) effect on present and future customers; and (4) long-term future effect on profitability. In some decision-making situations, qualitative aspects are more important than immediate financial benefit from a decision.

SWOT

Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture or in any other situation of an organization or individual requiring a decision in pursuit of an objective. It involves monitoring the marketing environment internal and external to the organization or individual. The technique is credited to Albert Humphrey, who led a research project at Stanford University in the 1960s and 1970s using data from the Fortune 500 companies.

The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. SWOT analysis groups key pieces of information into two main categories:
Internal factors - The strengths and weaknesses internal to the organization.
External factors - The opportunities and threats presented by the external environment.
The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include all of the 4P's; as well as personnel, finance, manufacturing capabilities, and so on. The external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or competitive position. The results are often presented in the form of a matrix.
SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade companies to compile lists rather than think about what is really important in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats.
It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that produces valuable strategies is important. A SWOT item that generates no strategies is not important.

Examples of SWOTs

Strengths and Weaknesses

• Resources: financial, intellectual, location
• Customer service
• Efficiency
• Infrastructure
• Quality
• Staff
• Management
• Price
• Delivery time
• Cost Capacity
• Relationships with customers
• Brand strength
• Local language knowledge
• Ethics
• Principles

Opportunities and Threats

• Political/Legal
• Market Trends
• Economic condition
• Expectations of stakeholders
• Technology
• Public expectations
• Competitors and competitive actions
  

PEST

It analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macroenvironmental factors used in environmental scanning. It is also referred to as the STEP, STEEP, PESTEL, PESTLE or LEPEST or Political, Economic, Socio-cultural, Technological, Legal, Environmental). Recently it was even further extended to STEEPLED, including ethics and demographics.
PEST/PESTLE alongside SWOT can be used as a basis for the analysis of business and environmental factors. PEST analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations.
It is a part of the external analysis when doing market research and gives a certain overview of the different macroenvironmental factors that the company has to take into consideration. Political factors include areas such as tax policy, employment laws, environmental regulations, trade restrictions and tariffs and political stability. The economic factors are the economic growth, interest rates, exchange rates and inflation rate. Social factors often look at the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. The technological factors also include ecological and environmental aspects and can determine the barriers to entry, minimum efficient production level and influence outsourcing decisions. It looks at elements such as R&D activity, automation, technology incentives and the rate of technological change.Technological can also affect hoovers in the business
The PEST factors combined with external microenvironmental factors can be classified as opportunities and threats in a SWOT analysis.

Human Resource Management (HRM)

It is the strategic and coherent approach to the management of an organisation's most valued assets - the people working there who individually and collectively contribute to the achievement of the objectives of the business.
The terms 'human resource management' (HRM) and 'human resources' (HR) have largely replaced the term 'Personnel Management' as a description of the processes involved in managing people in organisations.
Human resource management (HRM) is both an academic theory and a business practice that addresses the theoretical and practical techniques of managing a workforce. Synonyms include personnel administration, personnel management, manpower management, and industrial management, but these traditional expressions are becoming less common for the theoretical discipline. Sometimes even industrial relations and employee relations are confusingly listed as synonyms (e.g. Encyclopædia Britannica) although these normally refer to the relationship between management and workers and the behavior of workers in companies.
The theoretical discipline is based primarily on the assumption that employees are individuals with varying goals and needs, and as such should not be thought of as basic business resources, such as trucks and filing cabinets. The field takes a positive view of workers, assuming that virtually all wish to contribute to the enterprise productively, and that the main obstacles to their endeavors are lack of knowledge, insufficient training, and failures of process.
HRM is seen by practitioners in the field as a more innovative view of workplace management than the traditional approach. Its techniques force the managers of an enterprise to express their goals with specificity so that they can be understood and undertaken by the workforce, and to provide the resources needed for them to successfully accomplish their assignments. As such, HRM techniques, when properly practiced, are expressive of the goals and operating practices of the enterprise overall.
Nowadays, the more traditional synonyms such as personnel management are often used in a more restricted sense to describe those activities that are necessary in the recruiting of a workforce, providing its members with payroll and benefits, and administrating their work-life needs. These activities can require regulatory knowledge and effort, and enterprises can benefit from the recruitment and development of personnel with these specific skills.

Decision making

It is the cognitive process leading to the selection of a course of action among alternatives. Every decision making process produces a final choice. It can be an action or an opinion. It begins when we need to do something but we do not know what. Therefore, decision making is a reasoning process which can be rational or irrational, and can be based on explicit assumptions or tacit assumptions.
Common examples include shopping, deciding what to eat, when to sleep, and deciding whom or what to vote for in an election or referendum.
Decision making is said to be a psychological construct. This means that although we can never "see" a decision, we can infer from observable behaviour that a decision has been made. Therefore, we conclude that a psychological event that we call "decision making" has occurred. It is a construction that imputes commitment to action. That is, based on observable actions, we assume that people have made a commitment to affect the action.
Structured rational decision making is an important part of all science-based professions, where specialists apply their knowledge in a given area to making informed decisions. For example, medical decision making often involves making a diagnosis and selecting an appropriate treatment. Some research using naturalistic methods shows, however, that in situations with higher time pressure, higher stakes, or increased ambiguities, experts use intuitive decision making rather than structured approaches, following a recognition primed decision approach to fit a set of indicators into the expert's experience and immediately arrive at a satisfactory course of action without weighing alternatives.
Due to the large number of considerations involved in many decisions, computer-based decision support systems have been developed to assist decision makers in considering the implications of various courses of thinking. They can help reduce the risk of human errors.