DECISION MAKING

Submitted by :-

HARMAN &

KHUSHBOO

GULATI

What is Decision Making?

• Decision-making is a process of selection from a set of alternative courses of action,which is thought to fulfill the objectives of the decision problem more satisfactorily than others.

OR

• Decision making can be regarded as the cognitive process resulting in the selection of a course of action among several alternatives. Every decision making process produces a final choice.

Importance of Decision

Making• Better utilisation of resources

• Business growth

• Achieving objectives

• Increases efficiency

• Facilitates innovation

• Motivates employees

• Solving problems in management

• Teamwork

Types of Decision Making

• PROGRAMMED DECISIONS : A programmed decision is one that is fairly structured or recurs with some frequency.

• NON-PROGRAMMED DECISIONS :Non-programmed decisions are relatively unstructured and may occurs much less often. They are made in response to situations that are unique, are poorly defined and largely unstructured.

Decision Making Styles

• Directive – Use minimal information and consider few alternatives.

• Analytic – Make careful decisions in unique situations.

• Conceptual – Maintain a broad outlook and consider many alternatives in making long term decisions.

• Behavioral – Avoid conflicts situations by working well with others and being receptive to suggestions.

Conditions that affect the

possibility of Decision failure

• CERTAINITY• all the information the decision maker needs is fully available

• RISK● decision has clear-cut goals● good information is available● future outcomes associated with each alternative are subject to chance

• UNCERTAINITY● managers know which goals they wish to achieve● information about alternatives and future events is incomplete● managers may have to come up with creative approaches to alternatives

• AMBIGUITY● by far the most difficult decision situation● goals to be achieved or the problem to be solved is unclear● alternatives are difficult to define● information about outcomes is unavailable

OrganizationalProblem

Low HighPossibility of Failure

Certainty Risk Uncertainty Ambiguity

ProgrammedDecisions

NonprogrammedDecisions

ProblemSolution

Three Models of Decision Making

Classical Model

Administrative Model

Political Model

9

Characteristics of Classical, Political, and

Administrative Decision Making Models

Classical Model Administrative Model Political Model

Clear-cut problem and goals Vague problem and goals Pluralistic; conflicting goals

Condition of certainty Condition of uncertainty Condition of uncertainty/ambiguity

Full information about Limited information about Inconsistent viewpoints; ambiguous

alternatives and their outcomes Alternatives and their outcomes information

Rational choice by individual Satisfying choice for resolving Bargaining and discussion among

for maximizing outcomes problem using intuition coalition members

Decision Making StepsRecognize need for

a decision

Frame the problem

Generate & assess alternatives

Choose among alternatives

Implement chosenalternative

Learn from feedback

Decision Making Steps

1. Recognize need for a decision: Managers must first realize that a decision must be made.

• Sparked by an event such as environment changes.

2. Generate alternatives: managers must develop feasible alternative courses of action.

• If good alternatives are missed, the resulting decision is poor.

• It is hard to develop creative alternatives, so managers need to look for new ideas.

3. Evaluate alternatives: what are the advantages and disadvantages of each alternative?

• Managers should specify criteria, then evaluate.

Decision Making Steps

4. Choose among alternatives: managers rank alternatives and decide.

• When ranking, all information needs to be considered.

5. Implement choose alternative: managers must now carry out the alternative.

• Often a decision is made and not implemented.

6. Learn from feedback: managers should consider what went right and wrong with the decision and learn for the future.

• Without feedback, managers never learn from experience and make the same mistake over.

Problems in Decision Making

• Accuracy

• Participative Decision-making

• Timely Decision

• Communication of Decision

• Environment for Decision

• Implementation

Thank

You