05-Sep-20

COMPANY
LOGO

BUSINESS DECISION MAKING

Nguyen Minh Thu

Faculty of Statistics – National Economics University

Email: [email protected]

What are we going to learn?

• Introduction to Business Decision Making

• The collection of data
• Techniques to analyse data:
– Descriptive analysis
– Inferential analysis
– Modeling interactions between variables
– Time series analysis

Business Decision Making – Nguyen Minh Thu – [email protected]

Contents

Semester 1 Semester 2

1. Introduction to 1. Techniques to analyse data:

Business Decision Making Inferential analysis

2. Techniques to analyse data:

2. The collection of data
Modeling interactions between variables

3. Techniques to analyse 3. Techniques to analyse data: Time

data: Descriptive analysis series analysis

4. Probability and
sampling distribution

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Learning Outcomes

• Be able to use a variety of sources to collect data,

both primary and secondary

• Understand a range of techniques to analyse data

effectively for business purposes

• Be able to produce information in appropriate formats

for decision making in an organisational context

• Be able to use software generated information to

make decisions in an organisation

Business Decision Making – Nguyen Minh Thu – [email protected]

Materials

▪ Microsoft Excel - Data Analysis Toolpak

▪ IBM SPSS Package

Business Decision Making – Nguyen Minh Thu – [email protected]

Assessment

• Participation: 10%, including 5 small quizzes (Moodle)

• Group assignment: 30%, including 2 presentations

(15% each)

• Mid-term test: 10%

• Final exam: 50%

Students should achieve an overall mark of 4.5/10

in order to successfully pass the module!

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Why did they fail?

• Absent for the lessons

• Don’t put attention on the lessons
• Don’t do home assignments

✓ Spend less time to archive more

✓ Understand the issue
✓ Write notes in class
✓ Welcome all discussion
Business Decision Making – Nguyen Minh Thu – [email protected]

Some regulations

• All acts that affect the teaching and learning process are
strictly prohibited.
• Students who are late for more than 10 minutes after class
starting time will not be allowed to attend the class.
• Laptops and tablets are only allowed for the learning
purpose (calculating and serving lectures and exercises).

Business Decision Making – Nguyen Minh Thu – [email protected]

References

1. BPP Professional Education (2004), Business Decision Making,

Course book

2. Anderson, Sweeney, Williams, Camm, Cochran (2018), Statistics for

Business and Economics, 13th Edition, South-Western.

3. Linda H., John F. (2013), Applied Statistics for Business and

Management using Microsoft Excel, Springer.

4. Verma J.P. (2013), Data Analysis in Management with SPSS

Software, Springer.

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Warm up

Kahoot.it

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BUSINESS DECISION MAKING

Week 1:

INTRODUCTION TO

BUSINESS DECISION MAKING

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Outline

▪ Overview of business decision making

▪ The decision making process

▪ The need of statistics

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Some common questions

• What time did you get up this morning?

• Why did you choose to study BBAE?

• Why did you choose to wear these clothes today?

• What will you have for lunch?

• Which motorbike model did you buy?

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Decision

• A choice from two or more alternatives

• Two types of decisions:

- Routine

- Major

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Routine Decisions

• Are made on a day-to-day basis

• Don’t require a lot of time to think through

• Become even a habit in daily life

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Major Decisions

• Have long-term effects on life

• Should be made very carefully

• Need a lot of though

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Types of Decisions

• What time did you get up this morning?

• Why did you choose to study BBAE?

• Why did you choose to wear these clothes today?

• What will you have for lunch?

• Which motorbike model did you buy?

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Your Decisions

• Think about some decisions you have made

• Are they routine or major decisions?

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Facts and Figures

THE AVERAGE PERSON MAKES A MINIMUM

OF FIVE DECISIONS PER MINUTE

WHEN ENGAGED IN THOUGHT!!!

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Business Decisions

• Decisions made by business people aim to the

achievement of business objectives in a manner of
satisfying business needs and expectations.

• Two main type of business decisions:

- Operational decisions
- Strategic decisions

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Business Decisions

Features Operational Decisions Strategic Decisions

Objective
Target

Usage

Implications

Level of
management

Judgement

Happening

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Group discussion

• Create groups of 5
• Problem: you have a cafe and it’s one of three in
your neighborhood.
Identify some challenges, make strategic and
operational decisions corresponding to each challenge

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Business Decision Making

• Business decision making is central to all the

managerial activities, be it planning, organizing,
staffing, directing or controlling.

• An intellectual process
Aimed to achieve
• A selective process
organizational goals
• A continuous process

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The decision making process

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Step 1: Identify a Problem or a Goal

▪ A problem exist when there’s a difference between

an existing and a desirable state or a standard.
▪ The standard can be:
• Past performance
• Previously set goals
• The performance of some other unit within the
organization or some other organization

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Step 1: Identify a Problem or a Goal

▪ Example:
• Revenue decreases due to the fierce competition
• The product has not attracted customers
• The market expansion has not achieved the expected
effect
• Start-up companies want to launch new products

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Step 2: Generate Options

▪ List all the alternatives that could succeed in

solving the problem
▪ The wider the options you explore, the better your
final decision is likely to be
▪ Only list, without evaluating

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Step 2: Generate Options

▪ Some methods:
• Brainstorming (Crawford Slip Writing Method, Round-
Robin Brainstorming,…)
• Ask outsiders to join the discussion

▪ Example:
A start-up company want to launch a new product

→ Some options for them?

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Step 3: Analyze Options

▪ Identify decision criteria

Example: Some criteria for a new product?
- Own interest and passion
- Experience
- Trends
- Market demands
- Competitive landscape
- Cost
-…

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Step 3: Analyze Options

▪ Allocate weights to criteria

▪ Evaluate the feasibility, risks and implications of each
option
• Risk analysis
• Cost - Benefit Analysis
• Weight potential pitfalls against the possible rewards
• Analyze the pros and cons, strengths and weaknesses
for all the possible choices

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Example

• Important criteria and weights for car-buying decision

Criterion Weight

Price 10

Interior Comfort 8

Durability 5

Repair Record 5

Performance 3

Handling 1

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Example

Important criteria and weights for franchise decision

Criterion Weight

Start-up costs 10

Franchisor Support 8

Financial qualifications 6

Open geographical locations 4

Franchise history 3

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Example: Franchise decision

Start-up Franchise Financial Open Franchise

Alternatives
costs Support qualifications locations history

Curves for
10 3 10 8 5
Women

Second Cup 8 7 7 8 7

Jani-King 8 5 7 10 10

Liberty Tax
8 7 7 8 7
Service

McDonald’s 4 10 4 8 10

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Discussion

Generate and analyse some options in selecting

the location of headquarters/bank branch/…

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Step 4: Select the best option

Choosing the best alternative which have

the highest score!!!

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Step 5: Implement the decision

• Putting the decision into action

• Conveying the decision to and gaining commitment

from those who will carry out the decision

• Develop a plan to make the decision tangible and

achievable

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Step 5: Implement the decision

Writing a business plan

correlated with
increased success in
every one of the
business goals
included in the study

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Step 6: Evaluate the Decision

▪ The decision is evaluated by its outcomes.

• Evaluation the outcomes based on the desired goal and
criteria

• Assessing the effectiveness and efficiency of the

outcome or the entire process

▪ In case of any undesired results, each step of the

process is carefully reviewed to trace the root
causes.
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The Decision Making Process

IDENTIFY GENERATE ANALYZE SELECT THE IMPLEMENT EVALUATE AND

PROBLEM OPTIONS OPTIONS BEST OPTION DECISION LEARN FROM
DECISION

Need information

STATISTICS is a way to get information from data

and make decisions under uncertainty

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The Need of Statistics

GOOD DECISIONS ARE BASED ON FACTS

AND RESEARCH AND ARE OF HUGE VALUE TO
ANY ORGANIZATION

STATISTICS

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What is Statistics?

Statistics is everywhere
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What is Statistics?

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What is Statistics?

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What is Statistics?

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What is Statistics?

Statistics helps you make decisions

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What is Statistics?

The science of collecting, organizing,

presenting, analyzing and interpreting data

to assist in making more effective decisions.

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What is Statistics?

Making decisions

Interpret data
Analyze data

Present data

Organize data

Collect data
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Types of Statistics

Descriptive Statistics:
Summarizing Data with • Collect data (Survey,...)
numbers or pictures • Present data (Tables and graphs,...)
• Summarize data (Sample mean,...)

Inferential Statistics:
Making conclusions, decisions • Estimation (Estimate the population
mean weight using the sample mean
or predict based on data
weight,...)
• Hypothesis testing (Test the claim that
the population mean weight is 65kg)

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Types of Statistics

Descriptive Inferential
Statistics Statistics

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Some concepts

• Population vs Sample

• Parameters vs Statistics

• Data: Observation – Variable - Value

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Population vs Sample

Population:
A set of all interested elements
N represents the population size, maybe infinite

Sample:
A part of the population that is selected to represent
the entire group
n represents the sample size, finite

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Population vs Sample

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Parameters - Statistics

Population Sample

a b cd b c
ef gh i jk l m n gi n
o p q rs t u v w o r u
x y z y

Values calculated using Values computed from

population data are called sample data are called
parameters statistics

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Parameters - Statistics

Values Parameters Statistics

Size N n

Mean µ xത

Proportion p f

Variance σ2 S2

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