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DECISION MAKING
Submitted by :-
HARMAN &
KHUSHBOO
GULATI
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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.
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Importance of Decision
Making• Better utilisation of resources
• Business growth
• Achieving objectives
• Increases efficiency
• Facilitates innovation
• Motivates employees
• Solving problems in management
• Teamwork
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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.
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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.
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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
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OrganizationalProblem
Low HighPossibility of Failure
Certainty Risk Uncertainty Ambiguity
ProgrammedDecisions
NonprogrammedDecisions
ProblemSolution
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Three Models of Decision Making
Classical Model
Administrative Model
Political Model
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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
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Decision Making StepsRecognize need for
a decision
Frame the problem
Generate & assess alternatives
Choose among alternatives
Implement chosenalternative
Learn from feedback
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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.
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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.
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Problems in Decision Making
• Accuracy
• Participative Decision-making
• Timely Decision
• Communication of Decision
• Environment for Decision
• Implementation
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Thank
You