Making Decisions

Learning Outcomes

By the end of this part, students will be able to:

 recognize the importance of critical thinking in the decision-making process;

 consider alternatives and criteria in decision-making;
 apply lateral thinking to case analysis.

Introduction

Every day we make decisions: from what time to get up in the morning, to what
university to go to after we graduate from secondary school. We know we make them
all the time, but careful reflection will reveal that the quality of how we engage in the
activity can vary considerably. We make ‘snap decisions’ or ‘impulsive decisions’
based on instinct or spontaneity; however we also make very lengthy, well-thought
out decisions – usually because the repercussions of making a poor decision will
have a significant negative impact on something that is important to us.

What is a decision? Two standard definitions of decision-making are:

1. Decision making is the study of identifying and choosing alternatives based on the
values and preferences of the decision maker. Making a decision implies that there are
alternative choices to be considered, and in such a case we want not only to identify as many
of these alternatives as possible but to choose the one that (1) has the highest probability of
success or effectiveness and (2) best fits with our goals, desires, lifestyle, values, and so on.

2. Decision making is the process of sufficiently reducing uncertainty and doubt about
alternatives to allow a reasonable choice to be made from among them. This definition
stresses the information-gathering function of decision-making. It should be noted here that
uncertainty is reduced rather than eliminated. Very few decisions are made with absolute
certainty because complete knowledge about all the alternatives is seldom possible. Thus,
every decision involves a certain amount of risk.

Retrieved June 23, 2009, from http://www.virtualsalt.com/crebook5.htm

As a professional, you will be expected to make a great many decisions and it will be
essential that you form good habits of thinking logically and methodically before
reaching a conclusion.
Notes:

Task 1: Stages in decision-making

1.1 What is the most important decision you have ever had to make for yourself?
Probably one of the most important decisions concerned which program you would
study at university. Can you recall the steps you took, and what you did, to arrive at
your decision? Share your experience with your classmates.

interest

1.2 While we are certain that you made the correct decision as to your choice of
university and university subject, you may also recall times when you might not have
made the wisest of decisions. With the benefit of hindsight, describe the reason(s)
for making such a dubious decision.

Notes:
Task 2: Considering alternatives in decision-making

The ability to think critically and make logical decisions is an essential aspect of case
analysis. You must be able to interpret, analyze and evaluate ideas and arguments if
you are to develop a thorough understanding of a case. The most common decision-
making mistake is failing to consider all possible alternatives and their potential
outcomes.

2.1 Consider the following situation: imagine you are a teacher who has received a
complaint from Terry, one of your students, about a test you gave the class. This is
the note you receive.

I believe that the last test was unfair. I studied for many days before the test, and read the
relevant sections in the recommended books. I underlined important details, made notes,
studied them and revised them at least four times. After all this effort, I should have
received a good grade. Therefore, I think the test was unfair, and I am really disappointed.

Working with a partner, discuss the following questions.

1) What is the ‘conclusion’ of Terry’s argument?

2) What reasons does he give in support of his conclusion?
3) What implicit assumptions is Terry making?
4) Are these assumptions fair? Why/Why not?

1) Test is unfair
2) Terry studied hard for many days, put a lot of effort, revised many times and
still didn’t get a good result
3) The content of the test doesn’t match the material /
Study hard = good result / effort = grade
4) Not fair. Why?
Subjective assumptions (his own wish)
Internal / external factors that affect performance e.g body condition
2.2 Answer these questions in relation to Terry’s complaint.

1) What alternative courses of action are open to you?

-complaint the teacher

-retake the subject

2) Which is the best course of action to take? Why?

Task 3: Establishing criteria in decision-making

One common flaw in our thinking about decisions is neglecting our main concerns or
failing to consider what matters most to us. When the decision involves choosing
between alternatives, we need, first of all, to establish a set of criteria for forming
judgments.

3.1 Imagine that you have graduated from university and have worked in your field
for five years. Your company has offered to subsidize you while you study full time for
an MBA anywhere in the world. How will you decide where to go? What criteria would
you use? Try to think of five or six criteria and rank them in order of importance. Then
share them with your classmates.

Criteria I would use when deciding where to go for an MBA would be:

Location
Cultural
School resources
Career path / advancement
Certification
Campus facilities

One way to measure your alternative against your criteria is to assign each criterion a
number. With this technique, you list the criteria you want your decision to meet and
assign points to each criterion based on its relative importance in the decision. Then,
each alternative is given a certain number of points according to how fully it meets
the criterion. For points you can use a scale of 1 to 10, 1 to 100, or any other range
that makes sense to you.

3.2 Your teacher will suggest some websites that rank universities that offer MBA
programs. What criteria do they use? Then discuss in groups whether or not you
agree with the criteria. As a group, can you reach consensus on what the top three
criteria should be? You may find that you don’t all agree with each other regarding
the criteria that is important, however see if you can compromise and reach some
sort of consensus.

Our group’s top three criteria for choosing an MBA program:

Overall ranking
Location
Academic reputation
Mini-Case 3: A Human Rights Dilemma

The Republic of Niger is a developing country in Africa. Cheetah Sports is a

European sportswear company, child manufactures clothing in Niger. The company
has a strict policy against using child labor in its overseas factories.

John Chen is the regional manager for the Niger-based operations of Cheetah Sports.
For eighteen months, he used a small village in Niger for the production of sports
shirts. After discovering that the village-run operation was using child labor in the
production of these shirts, he immediately stopped all operations in the village.

Within a few months however, it was clear that most of the children formerly
employed by Cheetah had turned to other forms, of work. The region is highly
impoverished and the large size of families means that everyone, including the
children, must work. The villagers have asked John to re-establish Cheetah’s
operations in the village, and re-hire the former employees, including the children,
for the economic wellbeing of the area.

What should John Chen and Cheetah Sports do?

Rehire- able to maintain their daily life, limited choices for them in their country due
to their education level

No- child labor is illegal

Can you think of other companies with a similar situation?

 Part 5: Business Ethics and Corporate Values

Learning Outcomes

By the end of this part, you will be able to:

 explain the meanings of ‘ethics’ and ‘core values’;

 consider the importance of core values in decision-making;
 recognize ethical issues and consider the consequences of their choices;
 explain common business idioms related to morality in business.

Introduction
Consider and discuss your views about the following quotes on business ethics.

“IS BUSINESS ethics a real subject? To judge by the increasing interest in the fledgling
discipline it is. Harvard Business School is still deliberating what to do with its $20m gift for
teaching ethics from Mr. John Shad, a former chairman of America's Securities and Exchange
Commission.”

“L'Oreal is sponsoring a new master's degree program in "law and business ethics" at the
University of Cergy-Pontoise in France, according to a recent posting in EthicsWorld.
According to the post, the international cosmetics giant has developed the new graduate
degree course in association with France's ESSEC.”

“Confucian ethics as applied to the study of business ethics often relate to the micro
consideration of personal ethics and the character of a virtuous person. Actually, Confucius
and his school have much to say about the morals of the public administration and the market
institutions in a more macro level.”

Retrieved June 10th, 2009, from http://www.bnet.com/

Task 1: Understanding the concept of ‘ethics’

As we explored earlier in the section on ethical fallacies, ethics for some people can
simply mean ‘not breaking the law’. But is this sufficient in today’s global economy
where consumers and investors demand a higher standard of corporate behavior and
professional conduct. In small groups, discuss the following questions:
1.1 What do you understand by the word ethics?

1.2 Why, in your opinion, is business ethics a key notion in making business
decisions?

1.3 What are some ethical values that you think should form the basis of business
ethics?

Task 2: Taking account of core values

Many companies have a strong sense of mission and a set of core values that serve
to guide them in their decision-making processes, especially at critical moments.

2.1 Name the six guiding principles in the mission statement of Starbucks Coffee, or
the five core values of The Body Shop?
2.2 If you were to become the President of the Students’ Union at PolyU, what core
values would you promote among PolyU students?

Mini-Case 4: To Test or Not To Test?

Nirvana, a large UK cosmetics company, has a strict no-animal-testing policy, and all its
products are sold on the founding principle that no animals will ever be used as test
subjects for its products. This principle is one of the company’s core business values.

Lately, however, the company has suffered serious financial losses because of the failure
of two of its latest high-profile product lines. Many of the laboratory staff – including Dr
Harry Jameson, a senior scientist within the company – believes that the products
would not have failed if the staff had been allowed to carry out minimal testing on
animals.

Dr Jameson sincerely believes that using dogs and rats as test subjects in the
developmental stages would speed up the company’s scientific research and give more
accurate results. Accordingly, this would allow for the creation of better and – crucially
at this time – more commercially successful cosmetic products. He wanted to persuade
Nirvana’s Board of Directors to change the policy on animal testing and so allow him
and his fellow scientists to carry out low-level animal-testing on the company’s new
product lines. He believes that if the company does not change its policy, it will go out of
business within a year.

Unlike Dr Jameson and those who support his views, a number of their colleagues do
not believe that animal testing is the best way forward for the company at this time of
crisis. They believe that more thorough research is needed before Nirvana’s products
reach the shelves, and that it was simply a case of rushing out products before they had
been thoroughly laboratory tested that caused the latest products to fail. While these
colleagues are aware that the company is in financial difficulty, they are still resistant to
any change in policy regarding animal testing.

What should Nirvana do?

2.3 Work in groups of three or four. Discuss this mini-case with your group mates and
present your findings to the class.
Task 3: How ethical are you?
Imagine that you work for Xenon Corp., an American multinational involved in
manufacturing which has its Asian headquarters in Hong Kong. Xenon has factories
located in the New Territories and the Pearl River Delta.

Xenon has always prided itself on being an ethical company. All new managers need to
take ethics awareness classes to understand the importance of ethics, and what is
required of them. The company believes that fairness for all employees is extremely
important. To avoid any conflicts employees are not permitted to accept gifts valued at
more than HK$100. However, there is no policy regarding nepotism.

Read through each situation and decide which course of action is the best to take each
time. Choose A, B, C or D.

1. For several months now, one of your colleagues has adopted an aloof attitude to work,
and you have had to do some of his work in his stead. You think this is unfair. What do
you do?

A. Recognize this as an opportunity for you to demonstrate how capable you are.
B. Go to your supervisor and complain about this unfair workload.
C. Discuss the situation with your colleague in an attempt to solve the issue without
involving others.
D. Discuss the problem with the Human Resources Office.

2. You have been saving up to buy some computer software that costs $2,000. One of
your colleagues, however, tells you that he has made a copy of the company-purchased
software and taken it home, and suggests you do the same. What do you do?

A. You feel that you can copy it too, since nothing has happened to your colleague.
B. You tell your colleague that what he has done is illegal.
C. You report the matter to the Ethics Office.
D. You mention the matter to your supervisor.

3. You work in the mailroom and suspect that a colleague is using the Federal Express
courier service for personal mail. What do you do?

A. You ignore the situation.

B. You start using Federal Express for personal mail, too, but only in an emergency.
C. You contact the Ethics Officer.
D. You notify your supervisor.

4. A friend of yours wants to transfer to your Division but he may not be the best qualified
for the job. You do have a vacancy and one other person, whom you do not know, has
applied. What do you do?

A. Select the friend you know and in whom you have confidence.
B. Select the other person who you are told is qualified.
 C. Request a qualifications comparison of the two from the HR Office.

5. At a Saturday night party, you observe one of your company’s Quality Control
managers taking drugs. What do you do about it?

A. On Monday, you report the incident to your supervisor.

B. Do nothing since it took place outside working hours.
C. A few days later you see your Employee Assistance Program representative and
you mention the incident to her.
D. That same night you manage to pull the Quality Control manager aside and
suggest that he should stop using drugs.

6. A current supplier contacts you with an opportunity to use your expertise as a paid
consultant in matters not related to your company’s business, working only on
weekends. What would you do?

A. Accept the job if the Legal Department poses no objection.

B. Accept the job.
C. Report the situation to your supervisor and seek his advice.
D. Decline the position.

7. You are a buyer. One of your suppliers offers to give you and your supervisor two
expensive tickets ($800 each) for an upcoming concert. Your supervisor readily accepts
the ticket and plans to go to the concert. What do you do?

A. Tell the supervisor you will see him at the concert.

B. Remind the supervisor that the company code of ethics prohibits the acceptance
of any gift with a value greater than $100.
C. Decline your ticket; telling the supplier you would rather keep your relationship on
a businesslike level.
D. Ask the supervisor how the two of you should reimburse the supplier for the
tickets.

8. A colleague from your Central office signed up for a training course in Tung Chung.
You know he did not attend the course, but he was not at work either. How do you
handle the situation?

A. It is not your business, so you stay out of it.

B. Speak to your supervisor about the colleague’s absence.
C. Send an anonymous letter to the company’s Ethics Office.
D. Speak to your colleague about this discrepancy and see what his explanation is.

Task 4: Taking account of ethical commitments

Mini-Case 5: The Auditor’s Bind

Erica Lee works for the Auditing Section of the Hong Kong branch of a large
international accounting firm. She joined the company four years ago after graduating
with a BBA degree from PolyU, and has earned two promotions since then through her
outstanding work performance. In the past two years she has taken a number of
auditing trips to various cities in China. A fluent speaker of Putonghua, and a keen
traveler to different provinces in China, Erica considers herself an old hand at auditing
in China, and prides herself on the excellent rapport she can build up with her Chinese
clients.

Erica was now on one of her auditing trips, this time in Hangzhou. She was the field-in-
charge of an audit engagement with normal risk. It was the evening of her third day in
Hangzhou, and for once she found herself facing a problem.

This was the first time she has audited the company, West Lake Trading Company. She
had known about the assignment only two weeks ago, as the colleague who had been
auditing the company for the last three years, Joe Chiang, decided to resign from his job.

This afternoon she had a brief meeting with the General Manager of West Lake, Mr
Zhou Bei. At the meeting Mr Zhou hinted that he was not happy with Erica’s insistence
on the company producing documents that Joe had never requested. Mr Zhou said that
it had taken his staff hours of work to track down these documents. In Mr Zhou’s
opinion, the extra work was unnecessary, and more seriously and importantly, would
dampen the goodwill and mutual trust established between the company and the
accounting firm. Toward the end of the conversation, Mr Zhou also hinted that he would
be reporting his dissatisfaction to Erica’s supervisor, and would be seeking her advice.
He might, furthermore, consider using a different accounting firm in the coming year.

Erica felt she was in a bind. She had been a brilliant Accounting student at university,
and had bright career prospects in the auditing profession. She knew this was due to her
major strengths – conscientiousness and meticulousness. She had heard that her
predecessor, Joe Chiang, had often taken a different, much more relaxed, approach in
his work.

Is she ready to compromise on her own work style and principles? How will this
incident affect her standing, and her prospects for eventual promotion in her firm?
What alternatives does she have in terms of the action that she should take?

4.1 Work in groups of three or four. Discuss this mini-case with your group mates and
present your findings to the class.
Focus on Language

Listed below are some common business idioms related to morality in business that you
may encounter when dealing with native English speakers.

‘above board’ ~ A situation or business is described as ‘above board’, if it is open, honest

and legal.
There are no secret negotiations. Our dealings with them have been strictly above board

‘cut and dried’ ~ Refers to a situation, a problem, or a solution this is considered clear and
straightforward, with no likely complications.
When the new computer manager arrived, he didn’t find the situation as cut and dried as he
had expected.

‘feathering your nest’ ~ Is said of someone who takes advantage of their position in order
to obtain money so as to have a comfortable life.
He took every opportunity to feather his nest with kickbacks and bribes.

‘grease somebody’s palm’ ~ Is used to describe the action of giving money to someone in
order to gain an unfair advantage, or to obtain something they want.
In some countries, it is common practice to grease government officials’ palms in order to
get ahead in business.’

‘lip service’ ~ When a person or organization gives verbal support or approval but fails to
actually do anything.
In spite of promising equal pay for women, management is just paying lip service to the
promotion of women’s rights because nothing ever changes.

‘pass the buck’ ~ When someone doesn’t take responsibility for a problem and lets others
deal with it instead.
Whenever a customer comes to complain, she always finds a way of looking busy. Talk
about passing the buck!

Key Vocabulary from Part 5:

ethics/ethical nepotism
engagement dampen
rapport prospects
meticulousness compromise
mission core values
cosmetics founding
high-profile