Question

Discuss why qualitative characteristics must be considered when making decisions such as special orders, outsourcing, elimination and replacement decisions, and scarce resource allocation decisions. Give examples.

Answer 1

In various managerial decision making both quantitative and qualitative characteristics are important in final decision making .Both factors should be equally considered since it will have an impact on the final outcome. Qualitative information is mainly non –financial based and they impact the decision making in the long run. An organisation which ignores the qualitative factors can face issues in future and the decision taken may be adverse or may go against the firm. For example: If the firm does not consider employee morale in a make vs. buy decision and outsources the manufacturing it can lead to labor issues like strikes, lockdowns, etc Hence a firm should not make any decision based on one type of analysis only.

Some of the examples of qualitative characteristics to be considered in various decisions making are

· Impact on the employees and their morale

· Impact on the brand image of the firm

· Impact on the reputation of firm

· Quality of product supplied (make vs. buy decision)

· Reliability of the vendor

· Impact on the community in which the firm operates

· Customer perception and preferences

· Support availability from the vendor for technical issues

· Compliance to laws and regulations