Assessment of Performance Measurement in - St Clements University

nature (one column for each state of nature). The matrix could be in
form of a pay-off matrix or in the form of an opportunity cost matrix.
In the case of the pay-off of each row and column represents the
pay-off or profit for a given strategy and its corresponding state of
nature. Each state of nature is assigned a probability, which identifies
the odds that such a state of nature would prevail. Typically, in many
organizational problems, the probabilities of various states of nature
are known by virtue of determining how frequently they occurred in
the past.
c. STRATEGIC DECISION MAKING UNDER UNCERTAINTY
The conditions of uncertainty make the decision making process
much more complicated. The decision maker or strategist has no idea
or knowledge about the probabilities of various states of nature and
hence the expected values of various alternatives cannot be
calculated. Such problems arise wherever there is no basis in the past
experience for estimating such probabilities. For example, in the case
of marketing a new product, it is difficult to make judgments as to
how much this product will sell in different geographical areas or
about probabilities of these predetermined quantities in these areas
in order to make profit.
In such situations, there is no single best criterion for selecting a
strategy. However, there are a number of criteria, each justified by
rationale and is a function primarily of the organization strategist. The
selection of a strategy would depend upon the criteria to be used. These
criteria are:
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