Managerial Decision Making

Managerial Decision Making

Student’s Name

Institution Affiliation

Company Description

The proposed name for the new company is Green Times Insurance Agency. The company shall be an independent business entity with a wide range of products for world market. Green times insurance aims to offer services ranging from personal cover, auto insurance, retirements plans, property insurance, business covers and risk management. The company is an international brand which aims to provide globally competitive services in the world market. It targets upcoming businesses, working individuals, production and marketing companies.

The mission of the company is to offer customers a world class exceptional coverage, coupled with an outstanding value and reliable customer service. This shall go a long way in fostering a symbiotic partnership with clients so that both can achieve mutual benefits. More so, this helps the company to steer all the activities towards achieving its vision. The vision of the company is to be the leading international insurance company, and to offer ultimate reliability to clients.

Managerial decisions

Decision making is a key role and an attribute in management. An insurance company involves a wide range of decisions which range from short term to long term. These decisions include risk management, stock pricing, contracts awarding and control, legal engagements, valuation of damages and many others. Effective decision making entails the following steps; Establishing the objectives or problems, classifying and prioritizing the objectives, developing selection criteria, identifying alternatives, evaluating alternatives against the selection criteria, choice of the alternative that best suits the selection criteria and implementation of the decision. When managers understand this process of managerial decision making, decision making becomes more effective.

In many management scenarios, problem analysis is the Prerequisite of decision making. Decision makers must acquire sufficient information in order to make an informed decision. Problem analysis entail framing the issue by defining its boundaries, establishing the criteria with which to select from alternatives and developing conclusions based on available information. In problem analysis the stakeholders must establish the condition with its symptoms and finally define the underlying problem. For instance, when there is a symptom of low profits or declining sales, the underlying problem can be stated as poor market research. Failure to effective problem analysis leads to irrelevant decision making and thus there is a higher need for managers to equip themselves adequately with information.

Description of the problem

Since the company is very new, intensive marketing must be considered. The marketing department has identified several ways to make the company known to corporate and individuals. The department manager has concluded that media is the most effective marketing strategy. Three channels have been identified through which the company will expose itself to the audience through media and include television, radio and newspaper advertisements. The department is required to identify the minimum expenditure for this purpose which shall yield maximum coverage. The target population to cover is 2million people on the three channels. The data on maximum number of effective impressions on each channel, cost per impression and the audience covered is as follows:

[pic 1]

This problem can be expressed inform of linear functions as:

[pic 2]

Where A= Total audience

        An= Audience on newspaper

At= Audience on TV

Ar= Audience on radio

Total cost is given by:                 [pic 3][pic 4] which should be the minimum figure

Solution of the problem

The above linear function was transferred to excel and the following are the results.[pic 5]

From the above are the solver results which simulated a minimum spending of $17700 for a total of 45 impressions. The target population of 2000000 has been adequately met. To implement this, 7 impressions shall be made on the newspaper, 20 on the radio and 18 on TV.