HBL
PresentedBy:ViqarA.Usmani
RecommendedBook:
MakingManagementDecisionsby SteveCooke ,NigelSlack
PresentedBy:ViqarA.Usmani
Pleasewriteaonesentencedefinitionofdecisionmaking.
Theprocessofexaminingyourpossibilitiesoptions,comparingthem,andchoosingacourseofaction.
PresentedBy:ViqarA.Usmani
The word decision has been derived from the Latin word
"decidere" which means "cutting off".
Thus, decision involves cutting off of alternatives between those
that are desirable and those that are not desirable.
In the words of George R. Terry,
"Decision-making is the selection based on some criteria from
two or more possible alternatives".
PresentedBy:ViqarA.Usmani
Characteristics of Decision Making
Decision making implies that there are various
alternatives and the most desirable alternative is chosen to
solve the problem or to arrive at expected results.
The decision-maker has freedom to choose an alternative. Decision-making may not be completely rational but may bejudgmental and emotional.
Decision-making is goal-oriented.
Decision-making is a mental or intellectual process because
the final decision is made by the decision-maker.
(Cont.)
PresentedBy:ViqarA.Usmani
A decision may be expressed in words or may be implied frombehavior.
Choosing from among the alternative courses of operation implies
uncertainty about the final result of each possible course of
operation.
Decision making is rational.
It is taken only after a thorough analysis and reasoning and
weighing the consequences of the various alternatives.
PresentedBy:ViqarA.Usmani
Decision making: the process by which managers respond to opportunities and threats by analyzing options, and making decisions about goals and courses of action.
Decisions in response to opportunities:managers respond to ways to improve organizational performance.
Decisions in response to threats: occurs when managers are impacted by adverse events to the organization.
PresentedBy:ViqarA.Usmani
Programmed Decisions: routine, almost automatic process. Managers have made decision many times before. There are rules or guidelines to follow.
Programmed decisions are routine and repetitive and are made within theframework of organizational policies and rules.
These policies and rules are established well in advance to solve recurring problems in the organization.
Programmed decisions have short-run impact.
Example: Deciding to reorder office supplies.PresentedBy:ViqarA.Usmani
PresentedBy:ViqarA.Usmani
Non-programmed Decisions:unusual situations that have not been often addressed.No rules to follow since the decision is new.These decisions are made based on information, and a mangers intuition, and judgment.Non-programmed decisions are decisions taken to meet non-repetitive
problems.
Non-programmed decisions are relevant for solving unique/ unusual
problems in which various alternatives cannot be decided in advance.
A common feature of non-programmed decisions is that they are novel and non-
recurring and therefore, readymade solutions are not available.
Example: Should the firm invest in a new technology?
Classical model of decision making:a prescriptive model that tells how the decision should be made.
Assumes managers have access to all the information needed to reach a decision.
Managers can then make the optimum decision by easily ranking their own preferences among alternatives.
Unfortunately, mangers often do not have all (or even most) required information.
PresentedBy:ViqarA.Usmani
Rankeachalternativefromlowtohigh
Selectbestalternative
Listalternatives&consequences
Assumesallinformationisavailabletomanager
Assumesmanagercanprocessinformation
Assumesmanagerknowsthebestfuturecourseof
theorganization
PresentedBy:ViqarA.Usmani
AdministrativeModelofdecisionmaking:Challenges the classical assumptions that managers have and process all the information. As a result, decision making is risky.
Bounded rationality: There is a large numberofalternativesandinformationisvastsothatmanagerscannotconsideritall. Decisionsarelimitedbypeoplescognitiveabilities.
Incompleteinformation:mostmanagersdonotseeallalternativesanddecidebasedonincompleteinformation.
PresentedBy:ViqarA.Usmani
Uncertainty&risk
AmbiguousInformation
Timeconstraints&informationcosts
IncompleteInformation
PresentedBy:ViqarA.Usmani
Recognizeneedforadecision
Frametheproblem
Generate&assessalternatives
Chooseamongalternatives
Implementchosenalternative
Learnfromfeedback
PresentedBy:ViqarA.Usmani
1. Recognize need for a decision: Managers must first realize the need for which a decision must be made.
PresentedBy:ViqarA.Usmani
A problem is a felt need, a question which needs a solution. In the words
of Joseph L Massie
"A good decision is dependent upon the recognition of the right
problem".
The objective of problem identification is that if the problem is
precisely and specifically identifies, it will provide a clue in finding
a possible solution. A problem can be identified clearly, if managers
go through diagnosis and analysis of the problem.
Recognizeneedforadecision
Frametheproblem
Generate&assessalternatives
Chooseamongalternatives
Implementchosenalternative
Learnfromfeedback
PresentedBy:ViqarA.Usmani
2. Frame the problem:managers must frame problem for whichdecision is to be made.
Recognizeneedforadecision
Diagnosing the real problem implies knowing the gapbetween what is and what ought to be,
Diagnosis gives rise to analysis. Analysis of a problem requires:
Who would make decision?
What information would be needed?
From where the information is available?
PresentedBy:ViqarA.Usmani
Recognizeneedforadecision
Frametheproblem
Generate&assessalternativesChooseamongalternatives
Learnfromfeedback
PresentedBy:ViqarA.Usmani
3. Generate alternatives: managers must develop feasiblealternative courses of action.
If good alternatives are missed, the resultingdecision is poor.
It is hard to develop creative alternatives, somanagers need to look for new ideas.
Evaluate alternatives: what are the advantages and disadvantages of each alternative?
Managers should specify criteria, then evaluate.
PresentedBy:ViqarA.Usmani
Recognizeneedforadecision
Frametheproblem
Generate&assessalternatives
Chooseamongalternatives
Implementchosenalternative
Learnfromfeedback
PresentedBy:ViqarA.Usmani
4. Choose among alternatives: managers rank alternatives and decide.
While ranking, all information needs to be considered.
PresentedBy:ViqarA.Usmani
The decision maker must check proposed alternatives against limits,
and if an alternative does not meet them, he can discard it.
Having narrowed down the alternatives which require serious
consideration The decision maker will go for evaluating how each
alternative may contribute towards the objective supposed to be
achieved by implementing the decision
PresentedBy:ViqarA.Usmani
A decision maker can use several sources for identifying
alternatives:
His own past experiences
Practices followed by others and
Using creative techniques.
Recognizeneedforadecision
Frametheproblem
Generate&assessalternatives
Chooseamongalternatives
Implementchosenalternative
Learnfromfeedback
PresentedBy:ViqarA.Usmani
5.Implement choose alternative: managers must now carry out the alternative.
Often a decision is made and not implemented.
PresentedBy:ViqarA.Usmani
Once the alternative is selected, it is put into action.
The actual process of decision making ends with the choice of an
alternative through which the objectives can be achieved
PresentedBy:ViqarA.Usmani
Recognizeneedforadecision
Frametheproblem
Generate&assessalternatives
Chooseamongalternatives
Implementchosenalternative
Learnfromfeedback
PresentedBy:ViqarA.Usmani
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 might repeat the same mistake.
When the decision is put into action, it brings certain results.
These results must correspond with objectives, the starting point of
decision process, if good decision has been made and implemented
properly.
Thus, results provide indication whether decision making and its
implementation is proper.
PresentedBy:ViqarA.Usmani
Isthepossiblecourseofaction:
Legal?
Ethical?
Economical?
Practical?
PresentedBy:ViqarA.Usmani
Is it legal? Managers must first be sure that an alternative is legal both in this country and abroad for exports.
Is it ethical? The alternative must be ethical and not hurt stakeholders unnecessarily.
Is it economically feasible? Can our organizations performance goals sustain this alternative?
Is it practical
