Welingkar’s Distance Learning Division

CHAPTER-06

DECISION-MAKING

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Introduction

Decision-making is also one of the functions of the management. The success of management depends upon the quality of decision. If the manager fails to take correct decision, he may not extract any work from his sub-ordinates and may not find a way to finish his work also. Some of the decisions are taken emotionally. This should be taken with great care. Emotional decision leads to a lot of confusion. So, the decision-making is a work of the superiors.

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Welingkar’s Distance Learning Division

Definition

“Decision making is a process involving information, choice of alternative actions, implementations and evaluation that is directed to the achievement of certain stated goals.”

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Characteristics of Decision-Making

Decision-making is selection process. The best alternative is selected out of available alternatives. If there is only one alternatives, there is no decision-making.

Decision-making is the end process. Decision-making is presented by detailed discussion and selection of alternatives.

Decision-making is the application of intellectual abilities to a great extend. An intelligent man alone can take a good decision.

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Characteristics of Decision-Making

Decision gives happiness to an endeavor who takes various steps to collect the information which is likely to affect a decision.

Decision-making is situational. An individual takes decision according to the situations prevailing.

It is a dynamic process. It is taken to achieve the

objectives of an organisation.

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Characteristics of Decision-Making

Decision-making involves the evaluation of available alternatives through—critical appraisal methods.

A decision may be both negative and positive. A decision may direct others to do or not to do.

Decision––maker has the evaluation of decision which involves the using of resources in specified ways.

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Elements of decision-making

A problem is fully analyzed and the available alternatives are considered before taking a decision.

The best decision-making requires intelligence, experience and insight into a problem.

A decision is taken according to the environment of business.

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Elements of decision-making

Centralization and decentralization of authority affect the decision indirectly.

The psychology of an individual is involved in decision-making.

Decisions are taken when they are needed.

Employees are also involved in decision-making process

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Elements of decision-making

Political and social environment of business affect the decision-making if the management takes a decision after consulting the employees, the following advantages may accrue:

Better relations with employees

Loyalty to the management.

There is no hindrance in the implementation of a decision.

Efficiency of the employees is increased.

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Decision-Making ProcessIdentification of a ImplementationProblem

Conversion ofDiagnosing the Verifying the into actionProblem decision

Selection of bestCollect and analyze alternativethe relevant information

Discovery of alternative Analyzing the Screening of course of action alternatives alternatives

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Principles of decision-making

Marginal theory of decision-making:

• It is based on principle of diminishing returns

• Applied for sales, advertisement, promotion, training

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Principles of Decision-Making

Mathematical theory:

• Venture analysis, game theory, probability theory and waiting theory are examples

• It give scientific approach to manager

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Principles of Decision-Making Psychological theory

• Decision taken on basis of aspirations, technological skill, personality, social status and organisation status.

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Principles of decision-making

Principle of limiting factors

• Fundamental of a problem are studied.

• An inference or a conclusion is drawn

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Principles of decision-making

Principle of participation:

• Principle is based on human behavior and human relationship.

• Subordinate should be consulted.

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Principles of decision-making

Principle of alternatives:

• All alternatives are evaluated and screened and best alternative is taken for decision making.

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Characteristics of good decision or effective decision

Decision is taken after passing various stages. The basic objective of passing through all the stages is to solve the problems. The solution of the problem depends on how effectively the decision has been made or implemented.

Action orientation:

Goal direction:

Efficiency in implementation:

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Administrative problems in decision-making

Accuracy: Environment for decision: Timely decision: Communication of decision: Participative decision-making: implementation:

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Types of decision

Programmed decision : Non-programmed decision: Major decision Minor decision Operative decision Organizational decision

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Types of decision

Personal decision Individual decision Group decision Departmental decision Non-economic decision Crises decision Research decision

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Personal phase of decision-making

There are some differences in decision-making .These are due to personal characteristics due to Intelligence Education Experience Courage Motivation Forecasting ability Self-confidence

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