Persuasive Communication - How Audiences Decide. 2nd Edition

74 Understanding Rational Decision Making

devotion— [Criterion 5. The task ahead will not be easy.] that we here highly resolve that these

dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom—and that

government of the people, by the people, for the people, shall not perish from the earth. [Criterion 6.

Lincoln’s vision for the future: A nation of free people.]

Audience Decisions About Financial Resources

In addition to making decisions that help them manage their professional relationships, audience

members also make a number of decisions that help them manage their own or their organization’s

fi nancial resources. The six decision types concerned with the management of fi nancial resources

are investment, lending, usage, sourcing, budgetary, and borrowing decisions. These six types can

be further divided into three complementary pairs. The fi rst pair, investment and lending decisions,

are made in an effort to use money to make money. Investment decisions are made when audiences

decide whether to buy equity. Lending decisions are made when audiences decide whether to buy

debt.

The second pair, usage and sourcing decisions, are made in an effort to spend money wisely.

Usage decisions are made when audiences decide whether they can use a particular product, service,

or piece of information. Sourcing decisions are made when audiences decide who should supply

them with the product, service, or piece of information when the same product, service, or infor-

mation is offered by several different providers.

The third pair, budgetary and borrowing decisions, are made in order to fi nd money from either

internal or external sources to pay for the desired product, service, or information. Budgetary

decisions are made when audiences look for money generated internally to fund what they desire.

Borrowing decisions are made when audiences decide whether to accept others’ offers to lend them

money. The principal in a principal/agent relationship generally makes all six types of decisions

about fi nancial resources.

Investment Decisions: Responses to Requests for Investment

Audiences, acting as investors, who want to choose the best investment opportunity available

to them make investment decisions. For example, venture capitalists make investment decisions

when they decide to buy equity in a new fi rm. Wall Street analysts make investment deci-

sions when they decide to recommend a “buy,” “hold,” or “sell.” Private investors make these

decisions when they decide to purchase shares in a mutual fund. CFOs make them when they

decide to acquire another fi rm.

Investors make investment decisions in order to earn a good return for the amount of risk

they take, and in the case of one fi rm acquiring another, to strategically position the fi rm

against competing fi rms. Once an investment decision to buy is executed, investors become

owners and may be entitled to assume an oversight role in the fi rm’s or the fund’s management

and operations.

Professionals seek investment decisions from audiences when they want to raise cash for their

funds or businesses. Documents and presentations professionals produce in order to elicit invest-

ment decisions from potential investors include business plans (See the two versions of the business

plan executive summary on pp. 11–15), acquisition plans , acquisition announcements , prospectuses , tender

offers , earnings reports , and stock research reports.