DECISION MAKING

•It is an indispensable component of management process

•Managers see it as their central job because they constantly choose what is to be done, who is to do, and how to do.

TYPES OF DECISION MAKING

Programmed/structured

Non-programmed/unstructured

Semi structured

DECISION MAKING CONDITIONS

• CERTAINTY

• RISK

• UNCERTAINTY

DECISION MAKING PROCESS

Intelligence(problem

identification)

Design (alternative generation)

Choice(choosing an Alternative)

Implementation(putting alternative

In action)

INTELLIGENCE

• It involves searching the environment for conditions calling for decisions• It is related with the identification and formulation of the problem which is

to be solved by the decision• A problem is the gap between present and the desired state of affairs

• When a problem is identified it remains vague at the initial stage, in order to make it more clear and specific problem formulation is required

• Strategies for reducing complexity and formulating a problem:

1. Determining the boundaries

2. Examining changes that may have precipitated the problem

3. Factoring the problem into smaller sub-problems

4. Focusing on controllable elements• For this phase of decision making information requirement is in the form

of exception reporting ie. What kind of deviation exists between desired state of affairs and actual state of affairs.

DESIGN• This involves generation of possible alternatives through which the problem

can be solved.• A problem can be solved in several ways ,however all the ways cannot be

equally satisfying• The decision maker must try to find out the various alternatives available in

order to get the most satisfactory result of a decision• It should be kept in mind that all the alternatives cannot be considered for

selection because of obvious limitations of the decision maker or information about all the alternatives may not be available.

• A decision maker can use several sources for identifying alternatives-his own experience, practices followed by others, using creative techniques.

• This phase may require more intelligence so that the manager can decide if a particular alternative is suitable for solving the problem.

CHOICE

• It involves the choice of an alternative which can be put into action to solve the problem.

• For choosing an alternative which aims at solving the problem in the most appropriate way in a given situation, the manager must evaluate all the alternatives generated at the design stage.

• Having narrowed down the alternatives which require serious consideration, the decision maker will go for evaluating how each alternative may contribute towards the solution of the problem or objectives supposed to be achieved by implementing the decision.

• Evaluation of various alternatives presents a clear picture as to how each of these contributes to solution of the problem.

• The chosen alternative should be acceptable in the light of organizational objectives, and it is not necessary that the chosen alternative is the best one.

• At this phase managers require information tools that can keep track of the consequences ,costs, and opportunities by each alternative generated at the design phase.

IMPLEMENTATION

• Once al alternative is chosen, it is implemented , 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• However, decision making being a continuous and ongoing process must

ensure that the problem has been solved and the objectives have been achieved by the chosen alternatives.

• Implementation of a decision requires the communication to subordinates , getting acceptance of subordinates over the matters involved in the decision, and getting their support for putting the decision into action.

• The decision should be implemented at appropriate time and in proper way to make it more effective