Running head: Decision making process in the organisation.

Decision making process using SMART Tool.

Name of the student:

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 Decision making process in the organisation. 1

Table of Contents
Introduction:..................................................................................................................................2
The importance of process of decisions making within the context of organisation...............2
Selection of best alternative:.....................................................................................................2
Ensures efficiency of business:.................................................................................................3
Achievement of objectives:........................................................................................................3
Facilitates innovation:...............................................................................................................3
Ensures business growth:..........................................................................................................3
Evaluates managerial performances:......................................................................................3
Application of decision analysis:..................................................................................................4
Identify and outline a decision problem related to a case scenario that involves multiple
objectives:.......................................................................................................................................5
The case of application of Simple Multi-Attribute rating technique (SMART):.....................6
Stage 1: who are the decision makers?....................................................................................6
Stage 2: identifying the alternatives/option/course of actions:..............................................6
Stage 3: determining the relevant attributes/criteria:............................................................7
Table 1: scoring table of criteria:.............................................................................................8
Stage 4: knowing the performances of all alternatives based on criteria:............................8
Stage 5: determining the weight for each attributes:...............................................................10
Stage 6: for each option, the assign of weight...........................................................................11
Stage 7: make informed decisions:.............................................................................................13
Stage 8: sensitivity analysis:........................................................................................................14
Strength and limitation of analysis made by decision makers:...............................................14
Strength:...................................................................................................................................14
Weakness:.................................................................................................................................14
References:...................................................................................................................................16
 Decision making process in the organisation. 2

Introduction:
The following report provides the comprehensive insights in the context of Multiple Criteria
Decision Analysis (MCDA). MCDA is the decision making analysis tool that evaluates the
multiple options or criteria as a part of decision making process (Cinelli, et al., 2020). This tool
is used by everyone in their daily life and decisions are integral part of human lives. In the
context of business organisations, MCDA is the cost-benefit analysis and holistic approach. The
report shows the practical example of MCDA or multiple-objective decision analysis (MODA)
by applying SMART tool. SMART tool is a MCDA framework that decision makers adopts in
order to determine suitable options.

The importance of process of decisions making within the context of organisation.

Decision making is a vital process of selecting the best course of action/alternatives/option from
the multiple one. It means the people have to take actions for solving issues. In the context of
organisations, decision making process is the integral part of the management which aims at
improving efficiency (Bomhof, et al., 2019). Taking decision is the core part of the management
team, if any wrong decision is taken then it would be having a negative outcome on the
organisation. Decision making process is a continuous as well as dynamic activity of the
business and it should be ensured that the people of creative and sound mind must be involved in
the decision making process. Today, lot of organisation involves large number of people in their
decision making and the importance of decision making can be acknowledged well from the
points given below:

Selection of best alternative:

Decision making process plays an important role in choosing the best alternatives timely. For
each problems there are different kinds of solutions available but the decision maker has to
choose an effective and one solution as stated by Imandasari, et al., (2019). So, decision makers
involves in a process in order to evaluate the solutions using various accounting, statistical and
financial tools. Ethical and strategic decision enables the decision makers to evaluate and analyse
the solutions properly and choose most appropriate action.
 Decision making process in the organisation. 3

Ensures efficiency of business:

Every business has to involve in different decisions routinely for operation successful. Taking
right decision at right time is vital for every business and any sorts of wrong decisions would
lead to negative consequences. Business mainly has to take decisions and choose best course of
action related to marketing, customer support, production and various expansion activities. In
globalised era, where high competition persists, business has to take multiple decisions every day
(Pranjić, 2018). A right decision helps a business to sustain in highly volatile market and attain
competitive advantage.

Achievement of objectives:
Proper decision making process helps the business to attain goals and objectives. All
organisations strive hard to achieve business goals and these goals are termed as guiding factor
for all business operations as claimed by Rizun, Revina, and Meister, (2019). Taking a good
decision at a proper time helps in the achievement of these objectives.

Facilitates innovation:
Innovation is something which is needed to be adopted by every organisation in order to sustain
in the market. Thus, ethical decision making ensures the innovation and organisation can bring
new product ideas, new business processes and new creation. Implementing these changes needs
proper planning and an implementing procedures as opined by Muninger, Hammedi, and Mahr,
(2019) and rational decisions taken by the business management helps in adopting these
innovative ideas easily.

Ensures business growth:

Quick and rational decision enhances the productivity, efficiency and innovation of business.
Besides that, it helps in fuller and proper utilisation of resources. Strategic decision making
process helps the business facing huge challenges easily and eventually leading to the business
goal achievements (Bahari, et al., 2021).

Evaluates managerial performances:

Decision making should be the primary function of the management team. The managers take
number of decisions in a day that determines the quality of management as well. Effectiveness of
decisions can be clearly seen in the efforts and efficiency in delivering the roles and duties
 Decision making process in the organisation. 4

(Büyüközkan, and Tüfekçi 2021). Any kind of wrong or fragile decisions depicts the
management failure in performing their function. In this way the decision making helps the
organisation to evaluate the performance of management team.

Application of decision analysis:

The decision analysis refers to method of analysing the decision taken by the decision makers
considering its potential risk and uncertainties. In the process, the decision maker intends to
achieve something, which may be called as objectives, purpose and goals (Javed, et al., 2019).
The decision makers choose one particular alternative that is known as a strategy of decision
maker from among different alternatives. All the alternatives and results are assumed to be
known and there are various factors that affect the outcome for different strategies.

The foundation of decision analysis has been offered by a set of axioms as stated in von
Neumann and Morgenstern in 1947 (Ruiz, et al., 2018). These axioms offer a methods and
guidance for analysing decision problems.

The framework of decision analysis offers a holistic framework to combine traditional technique
of operation research, system analysis and management science with professional judgement in a
unified analysis in order to support decision making process.

The systematic structure of decision analysis is:

First step: determine the decision issues.

Second Step: analyse the key impact of course of action

Third Step: understand the choice of decision makers.

Fourth Step: evaluating and comparing the key alternatives.

 Decision making process in the organisation. 5

(Ruiz, et al., 2018)

Identify and outline a decision problem related to a case scenario that involves multiple
objectives:
Tullow Limited is the one of the oil company that has more than 7,000 oil wells MPU with +-
135 square miles area. Since 2017 to 2019, the company faced a huge loss in oil production and
found that the manual well monitoring is the biggest source for oil production loss. Traditionally,
the company uses this technology for real time monitoring and now business intends for
expansion of real time monitoring method. Thus, they adopted new method called as SCADA
(Supervisory Control and Data Acquisition) which will be implemented for additional 1900 wells
in D-field in order to increase the monitoring coverage by 70% of total population of the well
(Upadhyay, and Sampalli, 2020). The company requires selecting the best alternative for SCDA
technology that needs to be deployed for real well system of monitoring.
 Decision making process in the organisation. 6

New monitoring (real time) architecture is based on the SCADA technology that includes 6
major equipments, such as: Modem, Remote terminal unit, base transceiver station tower, field
devices, server and fibre optic.

The decision maker of the company conducts a meeting and decided to implement the SCADA
technology. Some of the SCADA methods suitable for company’s operation are giving below
and they have to choose any one option from given alternatives.

1. Radio trunking.
2. LFR
3. Fibre optic,
4. GPRS system and
5. Satellite system.

Decision maker applies SMART tool which is a MCDA method based on a linear additive
model. SMART tool is a holistic approach which introduced by Edward in 1971 and since its
inception it has gained lot of attention due to its simple and transparent approach (Fahlepi, 2020).
SMART tool can be applied in various decision making application and this has generally 8
stages. The performances of each option can be expressed in grades on numerical scales that can
be evaluated through the direct rating process. By using the SMART analysis, the decision maker
from various backgrounds can easily apply this method and developed a recommendation.

The case of application of Simple Multi-Attribute rating technique (SMART):

As mentioned above, there are key 8 stages of the SMART analysis.

Stage 1: who are the decision makers?

The decision maker in this case is executive of a company. He is in a managerial position that
has major contribution in this case. Decision executive is supported by the Management during
the process of decision making.

Stage 2: identifying the alternatives/option/course of actions:

The decision makers have already developed the alternatives based on previous project,
brainstorming and discussions with some industry expertise in the company. These expertise and
 Decision making process in the organisation. 7

professionals are: engineer, IT manager, senior petroleum manager, and project management and
operation representatives. The 5 chosen alternatives are:

1. Radio trunking.
2. LFR
3. Fibre optic,
4. GPRS system and
5. Satellite system.

Stage 3: determining the relevant attributes/criteria:

The relevant criteria in the options are called the ‘Decision Criteria’. The company has divided
the attributes in two major classifications, such as Cost and Benefit. The attributes/criteria have
been developed based on communications, group discussions and lessons learned from similar
projects.
Attributes
Data security and
Cost implementation
Frequency
license Benefits time

Investment
Coverage Band width Maintainabili
ty

Value tree
 Decision making process in the organisation. 8

Table 1: scoring table of criteria:

Stage 4: knowing the performances of all alternatives based on criteria:

In this stage, decision makers assess the performances of alternatives of SCADA technology
related to defined criteria with the scoring matrix given above.

1. Radio trunking:

criteria score
1: license 1.0
2: total coverage covered by alternatives 5
3: total bandwidth capability 1
4 : maintainability of a system 2
5 security of information and data 3
6: implementation procedure 5

2. Lincensed frequency
 Decision making process in the organisation. 9

criteria score
1: license 1.o
2: total coverage covered by alternatives 5
3: total bandwidth capability 4
4 : maintainability of a system 4
5 security of information and data 5
6: implementation procedure 5

3. Fibre optic:

criteria score
1: license 5
2: total coverage covered by alternatives 1
3: total bandwidth capability 5
4 : maintainability of a system 5
5 security of information and data 3
6: implementation procedure 1

4. GPRS:

criteria score
1: license 5
2: total coverage covered by alternatives 3
3: total bandwidth capability 3
4 : maintainability of a system 3
5 security of information and data 3
6: implementation procedure 5

5. Satellite:

criteria score
1: license 5
 Decision making process in the organisation. 10

2: total coverage covered by alternatives 5

3: total bandwidth capability 3
4 : maintainability of a system 2
5 security of information and data 2
6: implementation procedure 3

Stage 5: determining the weight for each attributes:

The weights of the each attributes have been assessed by decision makers through workshop and
meetings. They calculated the swing as well as normalised weight of each attributes/criteria as
shown in below the table:
 Decision making process in the organisation. 11

Stage 6: for each option, the assign of weight.

After the weights of criteria has been normalised, now the decision makers has to calculate the
aggregate score of each option/alternatives by multiplying each score in the table above with the
normalised weight. The details of the aggregate scoring have been given below:

Alternative 1: radio trunking aggregate score.

Criteria score weight total

criteria 1: frequency 1 0.13 0.12
license
criteria 2: coverage 5 0.18 0.93

criteria 3: 1 0.15 0.15

bandwidth speed
criteria 4: 2 0.14 0.30
maintainability
criteria 5: data 3 0.19 0.55
security
criteria 6: 5 0.19 1.02
implementation time
total aggregate score 3.08

Alternative 2: license of radio frequency modem

Criteria score weight total

criteria 1: frequency 1 0.12 0.12
license
criteria 2: coverage 5 0.18 0.93

criteria 3: 4 0.16 0.15

bandwidth speed
criteria 4: 4 0.14 0.30
maintainability
criteria 5: data 5 0.19 0.55
 Decision making process in the organisation. 12

security
criteria 6: 5 0.20 1.02
implementation time
total aggregate score 4.23

Alternative 3: fibre

Criteria score weight total

criteria 1: frequency 5 0.12 0.12
license
criteria 2: coverage 1 0.18 0.93

criteria 3: 5 0.15 0.15

bandwidth speed
criteria 4: 5 0.14 0.30
maintainability
criteria 5: data 3 0.18 0.55
security
criteria 6: 1 0.20 1.02
implementation time
total aggregate score 3.08

Alternative 4: GPRS:

Criteria score weight total

criteria 1: frequency 3 0.12 0.12
license
criteria 2: coverage 3 0.18 0.93

criteria 3: 3 0.16 0.15

bandwidth speed
criteria 4: 3 0.14 0.30
 Decision making process in the organisation. 13

maintainability
criteria 5: data 2 0.19 0.55
security
criteria 6: 5 0.20 1.02
implementation time
total aggregate score 3.24

Alternative 5: Satellite:

Criteria score weight total

criteria 1: frequency 5 0.12 0.60
license
criteria 2: coverage 5 0.18 0.93

criteria 3: 3 0.16 0.49

bandwidth speed
criteria 4: 2 0.14 0.28
maintainability
criteria 5: data 2 0.19 0.37
security
criteria 6: 2 0.20 0.61
implementation time
total aggregate score 3.29

Stage 7: make informed decisions:

The decision makers has conducted a cost benefit analysis which givers more insights
information before making any final decisions about the chosen alternatives from SCADA
technology. These alternatives have their own role to play in real time monitoring project.

The table below depicts that the decision maker can select two main alternatives which is
beneficial in terms of Cost and benefits, they are GPRS and licensed frequency radio. Cost for
 Decision making process in the organisation. 14

implementing GPRS is 2,102,000 and its aggregate value is 3.24 and on the other hand licensed
radio has cost of 2471,000 with aggregate value of 4.23.

It is better if the decision maker chooses licensed radio if their investment capital is higher as
they have high aggregate value and more the aggregate score more value they offer. They can
take GPRS as a second option as the budget is low but and there is also no vast difference in
aggregate score.

Stage 8: sensitivity analysis:

In order to determine the robustness of the solution, this method can be done. Sensitivity analysis
was conducted on chosen solution and changed the weight of ‘coverage’ and also the
‘implementation time’. However, the result shows that changes in these criteria will not change
the effectiveness of solutions. The chosen solution still has the highest aggregate value as
compared to others.

Strength and limitation of analysis made by decision makers:

Strength:
The decision makers have implemented the SMART tool which offers a range of critical
functions. Firstly, this tool has enabled the decision makers to translate values into decision
alternatives which is important in first step to determine what is important to the decision makers
(Borissova, and Keremedchiev, 2019). Sensitivity analysis and cost benefit analysis makes the
result more impactful and the ranking of criteria is possible according to their preferences and
values (Saltelli, et al., 2019). Strength of this analysis is that the decision has been taken in most
transparent and simple way. If any outside of management go through the decision making
process, he/she will be easy to understand without any complications.

Weakness:
The decision makers has evaluated the performances of each alternative over criteria which are
based on assumptions and forecasting. This can result in the inaccurate model for the decision
that does not reflect the references of decision makers. SMART technique is a time consuming
 Decision making process in the organisation. 15

and resource intensive tool (Oktavianti, Komala, and Nugrahani, F2019). Besides that, decision
makers have faced difficulties when assigning the evaluation criteria and their weights.
 Decision making process in the organisation. 16

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