Disadvantages Of Maximin Rule

Managers within organizations are faced with the challenges daily of making excellent decisions. In everyday life we are challenged in making sound decision, decision that will last for a life time. Folk often wonder after making a decision if it was the right choice, will it affect the people around me, was this a good choice for my family, and will the decision affect them. In order to be an effective manager you have to possess the skill of outstanding decision making skills. In order for one to be successful within their personal life they may also need to possess an understanding of effective decision making. The decision- making process should be one that makes a positive change. Can the decision making process work

Profit maximisation is when firms maximise their profits through sales and increasing the price of products. Profit maximisation occurs when total sale revenue is furthest above total cost which is when MR= MC. Firms are usually controlled by the managers, in order for managers to keep its position its must gain enough or maximise the firms’ profits, so it can satisfy the shareholders. However managers may want to take a different approach rather than maximising the firms’ profits. Managers may want to maximise managerial objectives such as maximising its sales rather than profits. However although they are taking a different approach, they still must gain enough profits to satisfy the firms’ shareholders in order to avoid losing their

Usually, the most common risk management strategies can be subdivided into multi-stage approach in order to obtain a better impression of the underlying risks and thus to increase the probability of mitigating the firm’s risks properly and successfully. Also General Motors Corporation has developed various rules and guidelines to help manage minimize the risks associated with their business and investment operations.

The maximin decision rule, is a basic comparison of two minimum outcomes (Douglas, 2012). Under this rule the highest or best out of the worst outcomes would be the right choice. In light of this fact, Business 2 would be chosen under this rule. Making $5,000 in profit is a better

The decision making of management is very crucial and involves various analysis to be performed. There are various ratios and methods that can be useful for mitigating the risks and increasing the expected returns with investments. The financial forecast is a mix of the behaviour,

Thirdly, option is to strategically adjust the prices of their products because consumers are often very price sensitive. By doing so the company can either create more value that defines the quality and quantity of the product.

After discovering the risks it may determine the risk tolerance. This is the level of tolerance that is about the risks that may occur (Heldman, 2011). Within a project refers to the level of risk tolerance that can be tolerated by putting in perspective the benefits that occur when taking that risk (Heldman, 2011). Project Manager depart a game of the budget as a contingency reserve. This is used so that in the event of any problems the project is not affected. It is a reserve that is intended to be used in case of emergencies, which can not be addressed through another type of risk (Heldman, 2011) management strategy. Manager can use several strategies to respond to the risks. Strategies to respond to negative risks are: acceptance, rejection, transfer, mitigation (Heldman, 2011). Acceptance is face the risk and accept the consequences of the risk already...Risks can have a positive impact, and for these the project manager uses

Identify the potential risks which affect the company and manage these risks within its risk appetite;

The rationale behind the minimax regret rule is to decrease the risk involved with business decisions and minimize the maximum regret or opportunity cost related from those decisions (Salvatore, 2011). The regret that is linked with the decision is determined by subtracting

In the next section the book presents two types of theories: game theory and behavioral theory. Game theory was created over 2,500 years ago by the Chinese military (Ho & Weigelt, 1997). It has only entered the business environment recently but still uses the same concepts and is a tool for doing strategic analysis. Game theory is essentially a way to make decisions. How will it affect your company? How will it affect your competitor? It takes into account cause and effect, considering all possibilities and what resources will be needed. The second theory offered is behavioral theory. This theory investigates why it is that managers often make irrational decisions that may negatively affect the future of the organization. Often, managers make decisions based on their own biases and not necessarily rational like the game theory.

When trying to determine the correct price, a number of factors must be considered: the market and its segments, the size of each segment, the ability to reach each segment, what distribution channels to target, whether to vary price by segment, the usefulness of promotional offerings, and whether the goal is to skim or penetrate each market.

Such decisions may affect the company’s profitability today but judging from the fact that high risk means low stock price and vice-versa, high return waits in the future.

The rational decision-making model describes a series of steps that decision makers should consider if their goal is to maximize the quality of their outcome. In other words, if you want to make sure that you make the best choice, going through the formal steps of the rational decision-making model may make sense. The following are the steps taken to come to a rational decision: 1. Identify the problem, 2. Establish decision criteria, 3. Weigh decision criteria, 4. Generate alternatives, 5. Evaluate the alternative, 6. Choose the best alternative, 7. Implement the decision, 8. Evaluate the decision.

This report first explored the constrains that Maxime faces in this decision making process. And then the three options are analyzed and compared in details by using a set of criteria, including financial return, franchise

When people argue with decision analysis and its achievements they usually mention the story of DuPont, an American chemical company. It managed to successfully integrate risk and decision analysis functions to both operational and strategic levels. The company claimed that Desciison and Risk Analysis not only brought tangible benefits to the company, but also intangible, such as increased attention and commitment to actions (Krumm et Roll, 1992).