If Two Heads are better than one, are four even better? - Decision Making

1. Organisation Behaviour Case 8 : “ If two heads are better than one, are four even better ?” Team member : Mohd Jaladi Muda (CGS00544501) Ooi Tse Zher (CGS00531001) Veni Priya (CGS00531501) Seow Swee Miee ( CGS00528301)

2. How do you decide? Go with your intuition … Trust your parents’ judgment … Do as what your friends are doing … Or just toss a coin?

3. Decision making is the process of choosing the best alternative for reaching objectives (Certo, 2009)

4. or = Maggie Becker, 24 Marketing Manager $100,000 A moderate-risk mutual fund A very low-risk AAA municipal bond fund Financial advisor Get great opinion from … Family own a nice nest egg

7. Monitor and Evaluate Results Rational Decision Making Model Defining the problem 1. Identify the decision criteria 2. Prioritize & weigh the criteria 3. Generate possible alternatives 4. Critically evaluate each alternatives 5. Compute the optimal decision 6.

12. Monitor and Evaluate Results Rational Decision Making Model What Maggie has done and missed in the Rational Decision Making Model! $100,000 Yes No Index Yes Partially No Matter of time Compute the optimal decision 6. Identify the decision criteria 2. Defining the problem 1. Prioritize & weigh the criteria 3. Generate possible alternatives 4. Critically evaluate each alternatives 5.

13. 2. Explain which investment would you choose and justify your answer.

14. Contributors towards decision making Heredity Environment Situation (Robbins 2003)

15. (Barclays Wealth 2008) Decision maker being … influenced by emotions anxiety regret fear hope

16. = Low returns ? = High returns ? High risks Low risks Investment risk Return on Investment (ROI).

17. Based on Warren Buffet , SWOT is an intellectual framework for making decisions. SWOT Analysis T hreats O pportunities W eaknesses S trengths

18. Common shortfalls in most financial strategies as below:- Too much money - one category Desire vs. Priorities Over-monitoring Inflations (Yap 2009) (Barclays Wealth 2008)

19. Five Key Suggestion by Investment Experts 1. Analyze the situation. 2) Be aware of biases 4) Do not assume that specific decision style is appropriate for every scenario. 5) Try to enhance creativity. 3) Combine rational analysis with intuition.

22. Financial Needs & Objectives of Maggie preserving wealth -> last for the entire retirement years. investment return will allow her to buy a proper house  home mortgage + other financial commitments saving + investing -> approaching retirement . stable income, if investment continues -> low risk + capital growth 1 2 3 $100,000

23. Financial Needs & Objectives of Maggie avoid wrong investments & diversify the money Not spending too much money in early years Control living expenses  inflation + medical expenses Stop assets investment too early + caught up by long term inflation can all be avoided 1 2 3 $100,000

24. 3. Based on groupshift, discuss which investment do you think Maggie’s family will choose ?

25. Group is Two or more individuals interacting & interdependent achieve particular objectives Formal Group Informal Group

28. Groupthink is Type of thought Cohesive in group Minimize conflict Reach consensus Without critically testing, analyzing & evaluating the idea

30. More often Groups tend toward a … risky shift. 1. Responsibility is dissolved 2. Emotional bond between members, decrease the anxiety , actual risk seems less.

31. A way to overcome risky shift Brainstorming

32. Method of brainstorming 1. Group meeting before any discussion - individual write down ideas + problems 2. Individual Idea presentation to group - no discussion - ideas recorded 3. Group Discussion - clarify & evaluate ideas 4. Group member rank-order the ideas - highest aggregate = final decision

34. Based on group shift principle , Maggie’s family will choose a moderate risk fund . $100,000

35. Summary

36. 3. Decision Making Process Decision Making 4. Decision Making Tools 1.Make Effective Decision 2.Better Management Decision Making – improve organization profits & goals

37. Thank you.