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CMA Foundation · Fundamentals of Business Economics and Management · Decision-making - Types and Process

A firm's sales fell 12% this quarter. The manager at once decides to cut the advertising budget, without checking whether the fall came from pricing, competitor action or product quality. Which step of the decision-making process has been neglected?

The manager has neglected proper problem identification and diagnosis. Falling sales is only a symptom; the root cause could be pricing, competition or quality. Acting on the symptom without finding the cause makes the later steps of the process unreliable.

  1. AImplementation of the decision
  2. BFollow-up and control
  3. CDiagnosis of the real problem and its causesCorrect
  4. DChoosing between two equally good alternatives

Explanation

The manager treated a symptom (falling sales) as if it were the problem and jumped to a solution. Proper problem identification requires diagnosing root causes first. Follow-up and implementation come later and are not what was skipped here.

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