Welcome BA 301 Research and Analysis of Business Problems

Paul Brennan 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 Homework600 Final Case200 Total 1000 Extra Credit100

More Grading On papers, problems and cases 6 steps30% Good writing30% Solution40%

Help Help should be sought! The Writing Center, 188F Cramer Hall, , 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, , 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 factsComprehend the Case Situation: Data Collection, identify relevant facts 2.Defining the ProblemDefining the Problem 3.Identify the causes of the problemIdentify the causes of the problem 4.Generate Alternative SolutionsGenerate Alternative Solutions 5.DecisionDecision 6.Taking ActionTaking 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 beaches most sunshine most modern hotels lowest cost Choosing a company to supply goods best after-sales service fastest delivery time lowest prices best 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”