The Decision-Making Model A 5–Step Process

The Decision-Making Model A business owner would use this model to decide on how to best satisfy consumer wants and needs E.g. How much inventory/stock to have on hand to meet the demand This model can also be used by an individual Considering a purchase that involves a lot of money Personal decisions – which career to pursue or which postsecondary institution to attend This model is helpful as an organizer

The Decision-Making Model GOOD DECISION 5--- 4--- 3--- 2--- 1--- Evaluate the decision Make a decision & take action Evaluate the advantages & disadvantages of the alternatives Identify the alternatives Determine the decision to be made PROBLEM

Chapter 1: Economic Basics Starting a Business Decision-Making Process DECISION-MAKING PROCESS Determine what decision has to be made. Clearly define the question to be answered. Formulate it so that you will be able to test or measure if you made the correct decision or not. 2. Identify the alternatives. Develop and state clearly several courses of action or actions that you could take to answer your question or problem. 3. Evaluate the advantages and disadvantages of each alternative. For each of the alternatives that you have identified state the advantages and the disadvantages of each course of action. All decisions have a benefit(s) and a drawback(s). 4. Make a decision and take action. Choose among the alternatives that you have identified. Put the decision into action. Take the steps to implement it. 5. Evaluate the decision. After sufficient time for your decision to run its course, review your decision. Did it do as you had planned? Where the disadvantages too high? Did the advantages of the decision that you opted for measure up to the your expectations. 4 4