Question

Qualitative factors are non-financial in nature but are important for management to consider when making decisions.

Reflecting on a company that produces and sells clothes (or are otherwise familiar), describe three qualitative factors that would be important for management decision-making. Then, assess each of them in order of importance.

Given your assessment, justify a situation where the qualitative factors would outweigh the quantitative results.

Be specific. this should also be self-reflective, please make sure to connect the assignment to: anyr personal experiences

Answer 1

Answer :

Introduction :

• Primary goal of investor-owned firms is shareholder wealth maximization, which translates to stock price maximization. But there is also the second side of a coin that cannot also be ignored i.e. humanity values and business ethics.
• The company should consider qualitative factors as part of their analysis of a decision.
• Due to qualitative factors the company would able to earn incremental profit in long run.
• Qualitative factors are decision outcomes that cannot be measured.

Qualitative Factors may include:

1. Employee morale, motivation, leadership : The impact on employee morale, motivation, leadership which will beneficial to the company to improve and increase the production capacity of the company.

2. Products : If the company is produce best quality product (cloths) then it will effect of a decision on a company’s public image and the reaction of customers. Due to that public image of the company is improve and it will also get competitive benefit in the market.

3. Customers : Sell of best quality of cloths will improve customers' opinions on the business of the company. It will get advantage on long-term future profitability.

Quantitative Vs Qualitative Factors

• Quantitative decisions are mostly based on statistical analysis of collected data whereas qualitative decisions are based on many algorithms like type and quality of data, factors that influence collected data, risk assessments etc. It is a more in-depth evaluation of information taking into account all possible factors that affect a given scenario not just the numerical data value to reach a decision.

• Quantitative factors are numerical basis for decision making; effect of decision on stakeholders and their response; investment appraisal; break-even analysis; market research; sales forecasting; critical path analysis an decision trees. Qualitative factors take into account other issues that may influence outcome of a decision like SWOT analysis (Strength Weakness Opportunities Threats); Human Resource Management issues like motivation, morale, retention etc; PEST (Political Economic Social Technological); Publicity and public image; long term survival/development issues and stakeholder analysis.

• In conclusion, quantitative decision is based on clear numerical statistical and quantifiable data without consideration to any other factors. Qualitative decision is more subjective not just based on the numerical statistical data but other associated factors that may have some or major influence on the collected data. It is a more in-depth analysis of all possible factors that can affect the decision making process. It has the comprehensive understanding of the analyst who is an active participant compared to quantitative decision where the analyst is the mere dispassionate investigator of discrete variables.