INS4002 October 14, 2020

Rational Decision Making

Process
n
Bu si n e ss i
u l t i c u l t u ral
M
en t
En vi ro n m
INS4002 October 14, 2020

Financial Problems at the gym

Introduction
Business running out of cash

The goal of our presentation is to build up a

Rational Decision Making Model to analyse
a business context
Context
Before we start with the session,
let's provide some context for this problems

Dodo Fitness & Yoga Center is struggling to keep the doors open

Due to Covid 19, Revenue of the gym had been running low, Dodo Fitness & Yoga Center is having
difficulty actracting customers & paying rents
• What we had: $50,000
• What we have left: $10,000

Time:
te s
1 mi nu
 October 14, 2020
Rational Decision Making
Process

1 Problems Definition 4 Generate the Alternatives

2 Identify Decision Criteria 5 Evaluate the Alternatives

3 Weight the Criteria 6 Select the Optimal Solution

MDM Company October 14, 2020

Let's begin!

Ar e y o u
r e ad y ?
MDM Company October 14, 2020

Step 1: Problems Dodo Fitness & Yoga Center is struggling to keep

the doors open

Definition
Due to Covid 19, Revenue of the gym had been
running low, Dodo Fitness & Yoga Center is having
difficulty actracting customers & paying rents
• What we had: $50,000
Recognizing a decision is needed and Identifying the
• What we have left: $10,000
problem
MDM Company

Increase Revenue

Keep business running

Step 2: Identify
Decision Criteria Return on investment

Determine what is relevant in making the decision. This step will

bring the decision maker’s, and any other stakeholder’s, interests,
values and preferences into the process. Service Quality

Raise up Finance
Step 3: Weight the Criteria 1 to 5

1 Keep the business running – (the 5

highest priority)

2 Increase Revenue 4

3 Return on investment 3

4 Raise up Capital 2

5 Preserve service quality 1

 Step 4: Generating the Alternatives

Action 1: Ask Landlord for Reduction on Rent

Keep business Running Action 2: Layoff staff

Action 3: Find a business Partner

Increase Revenue

Action 4: Reduce staff salary

Return on Investment Action 5: Ask for Bank Loan

Action 6: Reduce Membership price

Step 5: Evaluate the Alternatives
Actions Possible Outcomes Consequences Effectiveness

1 Negotiate for Reduction • Reducing budget spending • Potential rip in landlord - tenant
relationship
on Rent 5

2 Layoff staff • Reducing budget spending • Reduce employee satisfaction

• Serious effect on service quality
1

3 Find a Business • Aquired knowledge • Potential conflict

Partner (the highest • Spread risks • Divided Profit

effectiveness)
• Reduce financial Burden • Less independence 6
• Extra capital

4 Reduce employment
• Reduce employee satisfaction • Reduce employee satisfaction
salary • Possible effect on service quality • Possible effect on service quality
4
Step 5: Evaluate the Alternatives
Actions Possible Outcomes Consequences Effectiveness

5 Apply for a Bank Loan • Secure finance • High interest rate

• Might lose business if cashflow don't
meet the requirement 2

6 Reducing Membership • Drive sales • Lower perceive value

price • Attract new customers • Cut in profit
3
• Build relationship with old ones • Shifting Focus on Price
MDM Company June 1, 2021

Action 1: Ask Landlord for Reduction on Rent (5X5) 25

Step 6: Select the Action 2: Layoff staff (1X5) 5
optimal solution Action 3: Find a business Partner (6X5) 30
Action 4: Reduce staff salary (4X5) 20
Multiply effectiveness on each criterion times
the weighting OR (Effectiveness X the Action 5: Ask for Bank Loan (2X5)
10
Weighting)
Action 6: Reduce Membership price ((3X3)+(3X4))
21
MDM Company June 1, 2021

Action Taken – The

optimal solution

1 Find Business Partner (30)

2 Rent Reduction (25)

3 Reduce Membership Price (21)

MDM Company June 1, 2021

Thank you!
Have a
g re a t d a y
ah e a d .