Unit 7- Decision Making

8/8/2019 Unit 7- Decision Making

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66UNIT

DECISIONDECISION

MAKINGMAKING

Principles and Practicesof

Session No :1


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Copyright McGraw-Hill. All rights reserved. 22

OBJECTIVE OF THE UNITOBJECTIVE OF THE UNIT

To understand the concept of decision and decisionTo understand the concept of decision and decision

making with a view to make effective decisions.making with a view to make effective decisions.

To understand the process and issues involved inTo understand the process and issues involved in

decision making.decision making.

To understand various decisionTo understand various decision--making conditions andmaking conditions and

different techniques which can be used makingdifferent techniques which can be used making

decisions in these conditionsdecisions in these conditions

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Meaning of decisionMeaning of decision

A decision making is a choice between two or moreA decision making is a choice between two or more

alternatives.alternatives.

A decision is a selection of a course of action from A decision is a selection of a course of action fromtow or more alternatives , the decision making processtow or more alternatives , the decision making process

is a sequence of steps leading to that selectionis a sequence of steps leading to that selection

--Henry Sisk and Clifston WilliamsHenry Sisk and Clifston Williams

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Copyright McGraw-Hill. All rights reserved. 24Figure 2.1Source:

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Characteristics of decisionCharacteristics of decision--MakingMaking

1. Alternative must be available2. It is the selection process

3. It is an intellectual process

4. It the dynamic process

5. Individual can take no. of decision every day

6. Decision making is a situational

7. It involves evaluation of alternatives

8. Decision making is goal directed


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Copyright McGraw-Hill. All rights reserved. 25Figure 2.1Source:

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Types of decisionTypes of decision

Programmed Decisions-

Routine and structured decision

Lower level management use to take these decision

Short term impact

Clear cut procedure to take this decision

Non programmed Decision

Strategic or basic decision

Decision can be taken top management

Long term impact

Policy decision, important decisions


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Major and minor decisionsMajor and minor decisions--

the significance of the decisions are depend on thethe significance of the decisions are depend on the

following basisfollowing basis--

1.1.Degree of futurity of decisionDegree of futurity of decision--

2.2.Impact of the Decision on other Functional AreasImpact of the Decision on other Functional Areas--

..


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Qualitative Factors that enter the DecisionQualitative Factors that enter the Decision--

the decision which involves some subjective valuesthe decision which involves some subjective values

like principle of conduct, ethical values, social andlike principle of conduct, ethical values, social and

political beliefs etc. Ex. Giving bribe to income taxpolitical beliefs etc. Ex. Giving bribe to income taxofficer.officer.

are some the major decision.are some the major decision.

4.4. Recurrence of DecisionsRecurrence of Decisions--

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Operative and strategic decisionsOperative and strategic decisions

Individual and group decisionsIndividual and group decisions


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Advantages of group decisionAdvantages of group decision

1.Increased acceptance by the employees.1.Increased acceptance by the employees.

2.Easier coordination.2.Easier coordination. 3.Easier communication.3.Easier communication.

4.More information processed.4.More information processed.

Disadvantages of Group decisionsDisadvantages of Group decisions 1.It takes longer time1.It takes longer time

2.Groups can be indecisive2.Groups can be indecisive-- blaming each otherblaming each other

3. Group can compromise3. Group can compromise-- it can compromise to the principles ofit can compromise to the principles of

the organization.the organization. 4. group can be dominated by the individuals.4. group can be dominated by the individuals.

5.group may have a prior commitment5.group may have a prior commitment

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Types of Group techniquesTypes of Group techniques--

Nominal Group TechniquesNominal Group Techniques--

1. Members saliently and independently write their1. Members saliently and independently write their

opinion on the problems .opinion on the problems .

2. They present their ideas to the group. These2. They present their ideas to the group. These

ideas are summarized and written on the blackideas are summarized and written on the black

board.board.

3. These ideas are discussed for evaluated.3. These ideas are discussed for evaluated. 4. Members give their rating to the ideas through4. Members give their rating to the ideas through

voting .voting .

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Delphi Techniques.Delphi Techniques.

In this techniques the members who areIn this techniques the members who are

located in different locations and they do notlocated in different locations and they do not

know each other asked to send their opinionknow each other asked to send their opinion

ion the problems. They fill a questionnaire twoion the problems. They fill a questionnaire two

times and then management take the decisiontimes and then management take the decision

on their responseon their response

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Simple and complex decision-More factors- complex decision

Less factors- simple decision

1.Decision in which the problem is simple and the outcome

has a high degree of certainty is called mechanistic decisions.2. Decision in which the problem is simple and the outcome

has a low degree of certainty is called judgmental decision.

Decision in the field of markeging,investment etc.

3.Decision in which the problem is complex and the outcomehas a high degree of certainty is called analytical decision.

( Production decision )


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Steps in decision makingSteps in decision making

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1.problem identification1.problem identification--

When there is a deviation from the past experience.When there is a deviation from the past experience.

a.a. When there is a deviation from the plan.When there is a deviation from the plan.

b.b. When other people bring problem to the manager.When other people bring problem to the manager.ex. Customer complaints about late deliveries,ex. Customer complaints about late deliveries,

workers complains about poor workingworkers complains about poor working

conditions.etc.conditions.etc.

c.c. When the competitor perform better thanWhen the competitor perform better thanorganization. They are using new techniques fororganization. They are using new techniques for

selling.selling.


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Deciding pr

ior

itiesam

ongPr

oblem

s-Some problems can be solved at lower levels, higher levels.Some problems can be differed or delayed.

Some problems can be left unsolved. Ex. Napoleon.

3. Diagnosing the problem- the manager should firstdiagnose the problem. He should examine the problem from

all point of view. Ex. Problem of sales decline. Management

may think that there is problem in selling techniques. Butactually the problem my be in transportation of the goods.


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Development of alternative solutions orDevelopment of alternative solutions or

course of actioncourse of action..--

for solving the problem manager may have many alternatives.for solving the problem manager may have many alternatives.

He has to choose the best solution among these alternatives.He has to choose the best solution among these alternatives.

Ex. To increase the production. he may have options like to startEx. To increase the production. he may have options like to start

a new plant, by new machines, to start new shift, to starta new plant, by new machines, to start new shift, to start

overtime etc.while choosing the alternative a manager mustovertime etc.while choosing the alternative a manager must

consider following factors.consider following factors.

1. Feasibility of the solution.1. Feasibility of the solution.

2. Limiting factors2. Limiting factors

3. use of past experience.3. use of past experience.

4. He can copy of competitor4. He can copy of competitor

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Copyright McGraw-Hill. All rights reserved. 21 6


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Measuring and comparing the consequences of the

alternative solutions.-It involves the quality and acceptability of the solutions.

Tangible and intangible consequences.Tangible consequences can be measured in terms of units.

Such as cost of various alternatives etc.

Intangible consequences are those which cannot be calculated.

Ex.-effect of good labour relations, effect of some socialevents, effect of advertisements policy etc.

The solutions must be accepted by all the employees.


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Converting the decision into effective action and

follow up action.-

The decision should be communicated to the

concern dept. or employees.That decision should be accepted by everyone.

If possible workers participation should be there in

the decision making to avoid opposition


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Difficulties in decision makingDifficulties in decision making

1 Incomplete information1 Incomplete information

2. Unsporting Environment2. Unsporting Environment-- lack of motivation, lack of all roundlack of motivation, lack of all roundgoodwill.etc.goodwill.etc.

3. Non acceptance by subordinates3. Non acceptance by subordinates-- subordinate participationsubordinate participationis important.is important.

4. Ineffective communication4. Ineffective communication

5. Incorrect timing5. Incorrect timing

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Factors affecting decision makingFactors affecting decision making

TT1. INTELLIGENCE1. INTELLIGENCE

TT2. EDUCATION2. EDUCATION

TT3. EXPERIENCE3. EXPERIENCE

TT4. COURAGE4. COURAGE

TT5. MOTIVATION5. MOTIVATION

TT6. FORECASTING ABILITY6. FORECASTING ABILITY

TT7. SELF CONFIDENCE7. SELF CONFIDENCE

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Unit 7- Decision Making