1. The Decision-Making Model
A 5–Step Process

2. 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

3. The Decision-Making Model
GOOD DECISION
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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

4. 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