Welcome

BA 301

Research and Analysis of Business Problems

Research and Analysis of Business Problems

• Paul Brennan

• brennanhaus@comcast.net

• No office

• Speak with me about meeting outside of class

• Required Books– Yuthas in the bookstore– Brennan in the Copy Center

About Me

• I…

Research and Analysis of Business Problems

• Become expert at the Six Step process for problem solving

• Learn a thorough, systematic problem-solving approach that can be applied to a broad range of problems

• Gain experience in each component in the problem-solving approach by applying it to real-world problems

• Increase your facility in addressing challenging, complex, and unstructured problems

• Develop your ability to manage and evaluate your own learning and critical thinking processes

Learning

• Cases

• Papers

• Problems

• Participation

Grading

Participation and group work 200

Homework 600

Final Case 200

Total 1000

Extra Credit 100

More Grading

On papers, problems and cases

6 steps 30%

Good writing 30%

Solution 40%

Help

• Help should be sought!• The Writing Center, 188F Cramer Hall, 725-

3570, www.writingcenter@pdx.edu. The writing center offers workshops and individual assistance. You may need to sign up in advance for these services.

• The Skills Enhancement and Tutoring Center, 425 Smith Center, 725-4448, www.setc.pdx.edu can also help with writing and many other issues.

Honesty

• Attribute work to the person who did it

• Don’t copy other students work

Collaboration

• This is a good thing

• Work with other students and teams

• Share your successes and problems with each other

• Then do your own work

Six Steps

1. Comprehend the Case Situation: Data Collection, identify relevant facts

2. Defining the Problem

3. Identify the causes of the problem

4. Generate Alternative Solutions

5. Decision

6. Taking Action

Six Steps and PSU Process

• Situation Position• Problem Sense find and

prioritize problems• Cause of problem Uncover research

causes• Solutions Solve• Decision Build a business

case• Take action Achieve

How People make Decisions

Involving

Multiple Objectives

Examples of decisions involving multiple objectives

• Choosing a holiday liveliest nightlife least crowded beachesmost sunshinemost modern hotels lowest cost

• Choosing a company to supply goodsbest after-sales service fastest delivery time lowest pricesbest reputation for reliability

Bounded rationality

• The limitations of the human mind mean that people use ‘approximate methods’ to deal with most decision problems

• As a result they seek to identify satisfactory, rather than optimal, courses of action

• These approximate methods, or rules of thumb, are often referred to as ‘heuristics’

Heuristics

• These heuristics are often well adapted to the structure of people’s knowledge of the environment

• ‘fast and frugal heuristics’

Compensatory v. non- compensatory strategies

• Compensatory strategy - poor performance on some attributes is compensated by good performance on others

- Not the case in a non-compensatory strategy • Compensatory strategies involve more

cognitive effort

The recognition heuristic

• Used where people have to choose between two options

• If one is recognized and the other is not, the recognized option is chosen

• Works well in environments where quality is associated with ease of recognition

The minimalist strategy

• First apply recognition heuristic• If neither option is recognized, simply

guess which is the best option • If both options are recognized, pick at

random one of the attributes of the two options and choose best performer on this attribute

• If both perform equally well on this attribute, pick a 2nd attribute at random, and so on

Take the last

• Same as minimalist heuristic except that people use the attribute that enabled them to choose last time when they had a similar choice

• If both options are equally good on this attribute, choose the attribute that worked the time before, and so on

• If none of the previously used attributes works, a random attribute will be tried

The lexicographic strategy

• Used where attributes can be ranked in order of importance

• Involves identifying most important attribute and selecting the option which is best on that attribute (e.g. choose cheapest option)

• In there’s a ‘tie’ on the most important attribute, choose the option which performs best on the 2nd most important attribute, and so on

The semi-lexicographic strategy 

• Like the lexicographic strategy - except if options have similar performance on an attribute they are considered to be tied

Elimination by aspects (EBA)

• Most important attribute is identified and a performance cut-off point is established

• Any alternative falling below this point is eliminated

• The process continues with 2nd most important attribute, and so on

Strengths & limitations of EBA

• Easy to apply

• Involves no complicated computations

• Easy to explain and justify to others

• Fails to ensure that the alternatives retained are superior to those which are eliminated - this arises because the strategy is non-

compensatory.

Sequential decision making: Satisficing

• Used where alternatives become available sequentially

• Search process stops when an alternative is found which is satisfactory in that its attributes’ performances all exceed aspiration levels

• The “acceptance bar” can change as information is gathered.

Reason-based choice

• Shafir et al.:

‘when faced with the need to choose, decision makers often seek and construct reasons in order to resolve the conflict and justify their choice to themselves and to others’.

Factors that affect how people

make choices • Time available to make decision • Effort that a given strategy will involve • Decision maker’s knowledge about the

environment• Importance of making an accurate decision• Whether or not the choice has to be justified to

others • Desire to minimize conflict (e.g. conflicts

between the pros and cons of the alternatives)

Homework

• Reading – – Introduction “Yuthas” “Problem Solving Handbook” Pages 1 –15 – (Reprint book) Chapter 2 “Decision Analysis for Management

Judgment”– Read The article in the reprint book “6 Steps to Case Analysis”

• Assignment – Two page paper – Describe a decision you have made and how you made it. Use Six Steps to reanalyze the decision. How would you change the decision you made now that you have thought more about it?

• Assignment – Complete discussion question 2 from Chapter 2

• Assignment – Write a two page paper on “The Old Handyman” using “The Six Steps”