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INTRODUCTION

Decision making is one of those things that we do so often that we take it for granted often.

Every single thing we do is the result of a decision we made, and in fact every single thing we do

not do is the result of a decision too. Even when it feels like we are trapped or forced into a

decision and we have no option left.

Operations Research, or simply OR is an interdisciplinary science which deploys scientific

methods like mathematical modeling, statistics, and algorithms to decision making in complex

real-world problems which are concerned with coordination and execution of the operations

within an organization. The nature of organization is essentially immaterial. The eventual

intention behind using this science is to elicit an ideal doable solution to a problem scientifically,

which improves or optimizes the performance of the organization. Hence, Operations Research

brings together practitioner in diverse fields such as mathematics, psychology, and economics

and so on.

DEFINITION OF DECISION MAKING

Decision making is the thought process of selecting a logical choice from the available options.

When trying to make a good decision, a person must weigh the positives and negatives of each

option, and consider all the alternatives. For effective decision making, a person must be able toforecast the outcome of each option as well, and based on all these items, determine which

option is the best for that particular situation.

Components of Decision Making

Decision making in management has three components, these include the following:

1. Alternatives: There are two or more alternatives. Decision making means to select the bestalternative.

2. Choice: Decision making involves a choice. It means to choose the best solution for solvingthe problem.

3. Objectives or Problem: Decision making is objective oriented. It is done to achieve anobjective or to solve a problem.

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TYPES OF DECISION MAKING

Main types

There are many types of decision making and these can be easily categorised into the following 4groups:

Rational Intuitive Recognition primed decision making The ultimate decision making model

Rational decision making

Rational decision making is the commonest of the types of decision making that is taught and

learned when people consider that they want to improve their decision making. These are logical,

sequential models where the emphasis is on listing many potential options and then working out

which is the best. Often the pros and cons of each option are also listed and scored in order of

importance.

The rational aspect indicates that there is considerable reasoning and thinking done in order toselect the optimum choice. Because we put such a heavy emphasis on thinking and getting it

right in our society, there are many of these models and they are very popular. People like to

know what the steps are and many of these models have steps that are done in order.

People would love to know what the future holds, which makes these models popular. Because

the reasoning and rationale behind the various steps here, is that if you do x, then y should

happen. However, most people have personal experience that the world usually doesn't operate

that way!

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Intuitive decision making

The second of the types of decision making are the intuitive models. The idea here is that there

may be absolutely no reason or logic to the decision making process. Instead, there is an inner

knowing, or intuition, or some kind of sense of what the right thing to do is.

And there are probably as many intuitive types of decision making as there are people. People

can feel it in their heart, or in their bones, or in their gut and so on. There are also a variety of

ways for people to receive information, either in pictures or words or voices.

People talk about extra sensory perception as well. However, they are still actually picking up

the information through their five senses. Clairsentience is where people feel things,

clairaudience is hearing things and clairvoyance is seeing things.

Other types of decision making in the intuitive category might include tossing a coin, throwing

dice, tarot cards, astrology, and so on.

Decision wheels are usually more humorous than intuitive but they do have a serious

application.

Recognition primed decision making

Gary Klein has spent considerable time studying human decision making and his results are very

interesting. He believes that we make 90 to 95% of our decisions in a pattern recognition way.

He suggests that what we actually do is gather information from our environment in relation to

the decision we want to make. We then pick an option that we think will work. We rehearse it

mentally and if we still think it will work, we go ahead.

If it does not work mentally, we choose another option and run that through in our head instead.If that seems to work, we go with that one. We pick scenarios one by one, mentally check them

out, and as soon as we find one that works, we choose it.

He also points out that as we get more experience, we can recognize more patterns, and we

make better choices more quickly.

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Of interest here is that the military in many countries have adapted his methods because they are

considerably more effective than either of the types of decision making we've discussed already.

In fact, you could say that his model is a combination of the above two types of decision making.

The ultimate decision making

In terms of making decisions for your own life, this last of the types of decision making is my

favored model. It includes the ideas of the recognition primed decision making model and much

more.

Firstly, before you even make a decision, you establish how and who you want to be. You

obviously want to be in a good state so that you can make good decisions. But you also want to

be true to yourself, and that means knowing who 'yourself' is.

Once you learn how to be solid and centered, then and only then, do you make decisions. And

the decisions are always organized around staying true to yourselfand doing things that are good

for and aligned who you are. Doing things that are on your own path, and that allow you to

become even more solid and centered.

The whole model is organized around having the kinds of experiences that you want to be

having, and even when the world upsets your plans with its own, you learn how to use this and

manipulate it so that you still get what you want anyway...

Now it's obviously a little bit trickier to learn! Because you're learning about a human being and

not just writing out lists on a sheet of paper. But the time and effort invested means that you

develop a wealth in your life that you may have only previously dreamed of.

Rational Decision making can be regarded as the mental processes (cognitive process) resulting

in the selection of a course of action among several alternatives. Every decision making process

produces a final choice. The output can be an action or an opinion of choice.

A rational decision making model provides a structured and sequenced approach to decision

making. Using such an approach can help to ensure discipline and consistency is built into your

decision making process.

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As the word rational suggests, this approach brings logic and order to decision making. Our

rational decision making model consists of a series of steps, beginning with problem/opportunity

identification, and ending with actions to be taken on decisions made.

RATIONAL DECISION MAKING PROCESS

1) Perception of the deviation and defining the problem.

That is, what does the manager need to know to make the best possible decision? Properly

framing a management question entails translating the managerial decision into a question format

that allows a systematic search of the research literature.

A well-defined question will explicitly state the intervention, the outcome of interest, the type of

setting, the time frame, and the population. For example, a useful template might take the

following form: How does the intervention affect the most important outcomes within the

organization's local environment during the specified time period for the target population?

When considering a management issue, the broadly stated question should be parsed into more

specific questions, each addressing a single informational gap. Separate, single-issue questions

allow relevant information to be more easily accessible in a search.

Objective criteria related to maximizing an outcome of interest--not value-based questions such

as "which option is better?"--should be used to focus the management issue. Moreover, external

influences and drivers, such as the regulatory and reimbursement environment, as well as key

stakeholder concerns should be considered when framing a management question for an

evidence search. Finally, a clear statement of the desired information is valuable whether one is

reviewing the evidence on her own or is managing others, including consultants, who perform

these tasks.

2) Conduct a directed, comprehensive search for information.

Evidence relevant to the management question can be obtained from a wide array of sources,

ranging from colloquial sources, such as the experience of colleagues or organizational reports,

to research sources, such as peer-reviewed journals. While colloquial evidence can be helpful, it

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can also be misleading if the findings are too context-specific to be generalized. With the recent

development of several trustworthy websites, decision makers now have relatively easy access to

high-quality systematic reviews and meta-analyses of the available data on a given topic. For

healthcare research evidence, we highly recommend the EPOC (Effective Practice and

Organization of Care) database that is available online within the Cochrane Collaboration

Library. If useful evidence is unavailable from the literature, research evidence can also be

generated within the organization of interest by analyzing administrative and clinical databases

or conducting simple surveys or limited pilot studies. The components of this second step are

useful whether one is performing these tasks or confirming that others have performed them

adequately.

3) Diagnosis and analysis of the problem.

Decision makers in our study expressed that useful evidence had to meet the organization's

standards of accuracy, be applicable to the context at hand, and be actionable in concrete terms.

Evaluating the evidence ensures that these conditions are met. Because not all research is of the

same quality, decision makers must be alert when reviewing evidence for a decision.

In step three, determine the accuracy of the research evidence collected. High-quality research

clearly reports the research design, study context, sample definition and size, data-collection

methods, and any causal relationships between interventions and a given outcome. Poor-quality

research might omit or try to obscure the precision of measurement, central assumptions, or other

limitations to the generalizability of findings. Both quantitative and qualitative evidence should

provide a complete and balanced viewpoint, incorporating "the good, bad, and ugly," and should

be from a credible source, free of potential conflicts of interest.

4) Finding the root cause of the problem.

This is the most important aspect of understanding the problem. This process is highly complex

because the actual cause of a complex is embedded into many inter-dependant variables whose

relationships may not be easily understood. The cause of the problem should not be confused

with the symptoms that are just indicators of the underlying problem.

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5) Identification of resource and constraints.

Before any efforts are made to solve the problem, a critical look must be made at the available

resources to be sued in the solution as well as any constraints that may make the solution

infeasible.

6) Development of criteria of successful solutions.

Criteria are developed so that alternative solution for a problem under consideration can be

compared against the set standard. The criteria must be established as early as possible in the

decision making process so that such alternatives that do not measure up to this criteria can be

discarded. This encourages creativity in designing different courses of action that are feasible in

order to select the best one. The criteria must be consistent with the objective function so that the

decision that meets the criteria will achieve the given objective.

7) Generation and development of alternatives.

This requires a generation of all the possible solutions and their consequences to the

organization. All possible solutions need to be considered because the most obvious solution

may not be the optimum one.

8) Evaluating alternatives and selecting alternatives.

This is the most critical part of the decision making process. A wrong choice will negate all the

efforts put in the preparation of the process. Finding an optimum choice requires the

consideration of the possible impact of all alternatives in such a manner so that the chosen course

of action will not only meet the requirement of the objectives but also eliminate the root cause of

the problem.

9) Implementation of the decision.

Implementation means putting the selected alternatives into action and seeing it through its

completion. The process of implementation starts with assigning responsibilities to persons who

will be involved in carrying out the decision. It is essential to communicate the details of the

decision and the procedures for implementation to all the employees clearly, in detail and in a

manner that would invite commitment and dedication.

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10) Monitoring feedback.

Feedback provides the means of determining the effectiveness of the implemented decision. If

possible a mechanism should be built in the process to which would give periodic reports on the

success of the implementation.

THE CHOSEN ORGANIZATION IS EAST AFRICA BREWERIES LIMITED

BACKGROUND OF EAST AFRICAN BREWERIES LIMITED

East African Breweries Limited (EABL) is one of the leading branded alcohol manufacturing

companies in East Africa. The company was formerly known as Kenya Breweries Ltd. It is

principally engaged in the production, packaging and marketing of alcoholic and non-alcoholic

beverages. Kenya Breweries was founded in 1922 by two white settlers, George and Charles

Hurst. The company is owned by the Dodd family of Kenya. By 1990, most of the shareholders

were Kenyan and the company was very successful.

Tanzania Breweries had been started by Kenya Breweries in the 1930s. After being nationalized

in 1967, Tanzania Breweries was poorly managed. However, in 1993 the Tanzanian government

entered into a joint venture with South African Breweries Limited to run Tanzania Breweries.

South African Breweries is one of the largest and most efficient brewing companies in the world.They turned Tanzania Breweries around with extraordinary speed, almost tripling production in

the space of three years.

In 2002 East African Breweries Limited (EABL) and SABMiller Plc. affected a share swap of

their interests in their subsidiaries: Kenya Breweries Limited and Tanzania Breweries Limited.

EABL acquired 20% of the equity of Tanzania Breweries. SABMiller Plc. acquired a 20% equity

stake in Kenya Breweries.

The partnership between EABL and SAB Miller in Tanzania went through turbulence in 2009,

EABL claiming breach of contract by Tanzania Breweries (TBL) that led to low quality of

EABLs drinks that were produced by TBL and restriction of some of Diageos and EABL

brands to enter the Tanzanian market. This led to EABLs acquisition of 51% of Serengeti

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Breweries Limited (SBL) and exit from TBLs shareholder structure. SAB Miller still holds 20%

in Kenya Breweries.

SWOT ANALYSIS FOR EAST AFRICAN BREWERIES LIMITED

SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses,

Opportunities, and Threats involved in a project or in a business venture. It involves specifying

the objective of the business venture or project and identifying the internal and external factors

that are favorable and unfavorable to achieve that objective. The technique is credited to Albert

Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from

Fortune 500 companies.

STRENGTH: characteristics of East African breweries that give it an advantage over others in

the industry and these include the following:

Quality Assurance

EABL is committed to providing quality products and services to its customers worldwide.

Our Quality Policy is to develop, produce, and deliver on time, products and services that meet or

exceed customer expectations. In order to do this, we have implemented quality systems and processes

that are continually being improved to satisfy our customers' changing needs.

1.) EABL has a quality system in place that has been compliant with the ISO 9002 (1994) and EN

46001 standards since 1995. Since that time, we have had annual surveillance audits that have

continuously confirmed our compliance. EABL conducts internal audits to ensure compliance and

determine if there are any additional improvements that can be incorporated into our quality system.

Besides meeting the ISO 9001 requirements, EABL plants have been assessed by a team of auditors

from Kenya Bureau of Standards.

2.) All of the products that EABL subsidiaries (Kenya Breweries Limited, Uganda Breweries Limited,

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and the Central Glass Industries in Kenya) are compliant with the appropriate standard required by the

Kenya Bureau of Standards.

Our standards include both product consumer safety and product electromagnetic compliance (EMC).Also, as part of the design cycle, EABL has placed all our products through a validation cycle that can

include in house validation, supervised clinical testing and unsupervised clinical testing.

Good corporate governance

The Company continues to believe in good corporate governance in order for it to achieve its

business objectives. During the year, our compliance agenda was greatly enhanced across the

Group. Our efforts to create a heightened awareness of compliance standards at every level of

our business have been visible. EABL staff went through a programme called Pathway of Pride

which highlighted all the key policies that are specified in our Code of Business Conduct.

Through this programme, all employees are provided with an opportunity to fully understand the

work ethics and the regulatory expectations.

Organization effectiveness and efficiency

Following the restructuring of the organization, our processes have been streamlined, which has

resulted in staff cost efficiencies in many areas of the business. We have continued to review our

organizations structure to facilitate delivery of our business objectives. With a regional

expansion agenda, these reviews have taken into account our commercialization needs in the new

territories in which we operate. As the environment becomes increasingly competitive, we will

continue to provide strong integrated business teams in each of their territories. During the year,

we launched our new HR Operating model to allow for more effective HR support to all business

units.

Leadership

Effective leadership of our business will continue to give us a competitive edge in driving our

business to achieve and deliver exceptional results and shareholder value. Recognizing this, we

have continued to invest our resources in developing leaders in our business through formal

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training and on-the-job coaching. Our leadership development strategies have assisted with

driving our employee retention strategies within the business.

WEAKNESSES: are characteristics that place East African breweries at a disadvantage relative

to others.

The marketing strategies of East Africa breweries have failed to market the brands to West

Africa. Most of the products are sold with in Rwanda, Burundi, Kenya Ethiopia, and Tanzania.

Better strategies have to be drawn such that their products are also marketed in South Africa and

West Africa.

OPPORTUNITIES: external chances to make greater sales or profits in the environment.

Culture

As a multi- faceted business operating in very different places, we need to continuously focus on

operating as a single business entity. We recognize that there are many synergies we derive from

this approach. During the year, we had our first-ever All Staff Conference that brought together

all our staff from the different business units across the Group to discuss the driving of acommon culture aimed at delivering our business objectives and living the Diageo purpose of

celebrating life, every day, everywhere. Our improved interrelationships and increased

super-engagement levels, both individually and collectively, will assure the success of the

business into the future.

Media Relations

Our media message is to project a strong culture of good corporate citizenship. Throughout theyear, this message has been clear and consistent through stakeholder engagement, investor

relations and social investment initiatives. EABL media coverage was consistent and often

accurate on issues pertinent to the business, helping to further propel the companys reputation to

new heights. We view the media fraternity as partners of growth as they act as channels for our

messages to shareholders, investors, consumers and the public.

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TREATS: external elements in the environment that could cause trouble for the business.

Possible increase in competition - there are over 15 other breweries, and improvements inproduct provision from the current competitors may result in some loss of clients to

competitors.

Increase in the cost input. Currently in East Africa there is inflation and this implies that EastAfrica breweries has to pass over the costs to the consumers that they suffer in procuring the

raw materials used in production of the brews to those who consume their products since

they do not stand to make losses

And Porter is also particularly recognized for his competitive 'diamond' model, used for

assessing relative competitive strength of nations, and by implication their industries:

1. Factor Conditions: production factors required for a given industry, for example, skilledlabour, logistics and infrastructure.

2. Demand Conditions: extent and nature of demand within the nation concerned for theproduct or service.

3. Related Industries: the existence, extent and international competitive strength of otherindustries in the nation concerned that support or assist the industry in question.

4. Corporate Strategy, Structure and Rivalry: the conditions in the home market that affecthow corporations are created, managed and grown; the idea being that firms that have to fight

hard in their home market are more likely to be able to succeed in international markets.

5.SWOT ANALYSIS IN EAST AFRICA BREWERIES LIMITED STRATEGY

IMPLEMENTATION AND FORMULATION

SWOT Analysis is a method for strategy formulation and implementation used to evaluate the

Strengths, Weaknesses, Opportunities, and Threats involved in the early stages of change

management. A corporation, product, or process that is not regularly examined and evaluated

cannot understand why it has succeeded or why it has failed. A business that objectively and

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systematically examines its processes can take steps to improve on what worked well and modify

or eliminate what worked poorly.

Organizational survival depends on keeping the organization alert to developing trends and

economies. SWOT Analysis is a method for strategy formulation and implementation used to

evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in the early stages of

change management. A corporation, product, or process that is not regularly examined and

evaluated cannot understand why it has succeeded or why it has failed. A business that

objectively and systematically examines its processes can take steps to improve on what worked

well and modify or eliminate what worked poorly. The purpose of making strategic marketing

changes or process improvements is to enhance opportunities for organizational

success. Organizations must be prepared to implement change effectively or die. The SWOTAnalysis will analyze and evaluate several environmental aspects that could optimize or diminish

the desired outcome of the project. The audit will research fluctuations in the organizational,

industry-wide, and geographic culture, explore economic, demographic, and market variables,

investigate deviations in legal, regulatory, and compliance issues, and assess organizational and

competitive technological advances, changes, and obsolescence. It will reveal barriers to new

entrants, and copy-cat products and services.

Significant to the accuracy of the SWOT Analysis is anticipating trends within the

industry. Keeping an eye on competition is crucial to making appropriate adjustments to

maintain competitive advantage. A SWOT Analysis involves thorough evaluation of all

elements of strategy and formulation.

Correctly identifying the components of a SWOT Analysis is critical. Subsequent steps in the

process of strategy formulation for the purpose of the achievement of organizational objectives

may be derived from the analysis. The following is a sampling of SWOT Analysis recently

performed by the Author on Eastern African Breweries Ltd

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SWOT Analysis

Strengths

East African Breweries Ltds innovation and resourcefulness has helped maintain its rankingamongst the top successful bank. East African Breweries Ltds strategic focus on the business

and educational markets has resulted in a significant market share in each of those

segments. East African Breweries Ltds strategic development of its direct marketing agenda has

resulted in phenomenal growth.

Weaknesses

If formal techniques, such as quality function deployment, are not used to explicitly focusinnovation efforts on consumer demand, quality can become lost in the firm's narrow pursuit of

speed as an end in itself, rather than an instrumental end to the success of the project. (Kessler,

1996) Friendly fire or healthy competition amongst colleagues for idea generation or

innovative solutions could result in faulty thinking, resistance, dangerous shortcuts, or liability

issues. At a global level this strategy must be well thought out and carefully implemented in

order to avoid cultural faux pas that could lead to misinterpretation of the customers true needs.

Methods of post evaluation

Desk Studies

Desk Studies are performed prior and in support/complementarity of on-site reviews. They are

used to categorize and review operation/related data and progress reports. Only as an exception,

Desk Studies will be used without verification through an on-site review. This should be justified

by a marginal scale of an operation or other circumstances such as an active workout that might

be disturbed.

Surveys

Surveys are based on interviews and questionnaires that are used in interaction with operation

counterparts/target groups. They are normally performed along with Desk Studies and on-site

reviews in order to collect and process specific information. Depending on each case a different

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degree of coverage (sampling) and structuring (standardized questions and answers) will be

applied.

Data gathering/verification

The PEO, when performing an evaluation, collects data by a range of methods from

reconnaissance surveys to formal statistical surveys and targeted field studies. To ensure

credibility and objectiveness, each evaluation has to be based on a thorough on-site review.

During field missions, all key sources of information are (re)visited, fo r example

company/project site, files and management, external auditors, consultants, target groups, local

authorities, Clients/suppliers. The Staff Directly Involved with Operations support the

information gathering process by provision of all relevant files, data, progress reports, briefs,

contacts, and so on. Upon a PEO request and subject to the relevant Vice Presidents or

Presidents approval, a member of the Staff Directly Involved with Operations will accompany

the evaluator(s) during a field mission and/or will suggest a local counterpart for such a support.

Cost-benefit Analysis

Cost-benefit analysis (CBA) is a form of economic analysis that normally expresses the key

benefits and costs in commensurable and actual monetary terms and arrives at a single index to

determine the value of a project. Various forms of CBA are applied, Post evaluation depending

on the project for example social CBA, which has the perspective of an entire region/economy

and takes into account distributional and other aspects. CBA will normally refer to the

application of such analysis at the phase of project appraisal.

Activities during post evaluation include;

TIMING

To be effective, the evaluation should have appropriate timing. Post-evaluation requires a certain

degree of evaluability, known asEarly Operating Maturity2, which may vary from case to case3.

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In the early years of the Banks operation, that is to say by 2005, it will be natural to perform

post-evaluations soon after operations completion/disbursement. This will allow for covering

the need of early stage lessons that will ensure steering and fine-tuning of the BSTDB. The

timing of Evaluation Studies and Mid-Term Evaluation Reports will be based on needs,

demand/requests, and resource availability at the PEO.

CREDIBLE COVERAGE

Initial evaluation coverage, i.e. by 2005, will be very high due to the smaller size of the statistical

population as well as the specific institution-development needs of the Bank. It will also depend

on the type of report to be produced and will have the following indicative share:

PEO reviews of OCRs - performed on each operation for which an Operation Performance

Evaluation Report (OPER) will not be produced.

CONCLUSION

In a nutshell a rational decision making provides a structured and sequenced approach to

decision making. Using such an approach can help to ensure discipline and consistency is built

into your decision making process.

Some weaknesses arise if we attempt to use the decision making process in isolation. This is

particularly important where complex or important decisions are involved. The principle

assumption of the rational decision making process is that human beings make rational decisions.

However, there are numerous factors which determine our decisions, many of which are not

rational. In many situations decisions have to be made with incomplete and insufficient

information. Judgment, intuition, experience and knowledge all come together when making

decisions.

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REFERENCE

An introduction to Operational Research-3rd Edition and enlarged edition by C.R. KOTHARI Operations Research Principles and practice 2nd Edition by RAVINDRAN PHILLIPS

SOLBERG

Operations Research by PREM KUMAR GUPTA D.S HIRA INTERNET