Decision Making

“Decision making is a conscious human process involving both individual and social phenomenon based upon factual and value premises which concludes with a choice of one behavioral activity from among one or more alternatives with the intention of moving towards some desired state of affairs.”

By- Fremont A. Shull

Concept of decision and decision making

The word decision has been derived from the latin word ‘decidere’ which means ‘a cutting away or a cutting off, or in a practical sense’. Thus, a decision involves a cut of alternatives between those that are desirable and those that are not desirable. The decision is a kind of choice of a desirable alternative.

“A decision represents a judgement; a final resolution of a conflict of needs, means or goals; and a commitment to action made in face of uncertainty & complexity.”By- Felix M.Lopez

Features of Decision Making

Decision making implies that there are various alternatives and the more desirable alternatives is chosen to solve the problem.

Existence of alternatives suggests that the decision maker has freedom to choose an alternative of his liking.

It may not be completely rational but may be judgemental and emotional.

It is like any other management process, is goal directed.

Types of decision Programmed and Non-

Programmed Decision.

Strategic Decision and Tactical Decision.

Programmed Decision

Programmed decision are routine and repetitive and are made with in the framework of organisational policies and rules.

Non-Programmed decision

Non-programmed decisions are relevant for solving unique and unusual problems in which various alternatives cannot be decided in advance.

Strategic Decision

Strategic decision is a major choice of actions concerning allocation of resources and contribution to the achievement of organisational objectives.

Tactical Decision

Tactical decision is derived out of strategic decision. It relates to day-to-day working of the organisation and is made in the context of well-set policies and procedures.

Decision Making Process

Specific objective

Problem indetification

Search for alternatives

Evaluation of alternatives

Choice of alternatives

Action Results

feedback

Specific Objectives

The need for decision making arises in order to achieve certain specific objectives. Every action of human being is goal directed. This is true for decision making also which is an action.

Problem Identification

Since a particular decision is made in the context of certain given objectives, indentification of problem is the real beginning of decision-making process. A problem can be indentified much clearly, if managers go through diagnosis and analysis of the problem.

Search for Alternatives

Manager can search the alternatives by his own past experience or by using creative techniques. In this the manager will confine their search for those alternatives which will overcome the limiting factors.

Evaluation of Alternatives

After the various alternatives are indentified, the next step is to evaluate them and select the one that will meet the choice criteria.

Choice of Alternatives

Choice aspect of decision making is related to deciding the most acceptable which fits with the organisational objectives. It may be seen that the chosen alternative should be acceptable in the light o the organisational objectives

Action

Once the alternative is selected, it is put into action. Truly speaking, the actual process of decision making ends with the choice of an alternative through which the objectives can be achieved.

Results

When the decision is put into action, it brings certain results. Therefore managers should take up a follow-up action in the light of feedback received from the results.

HOW SHOULD DECISIONS BE MADE? 

•Decision are made with the help of “Rational Decision making process”. • 

•Rational: It refers to choices that are consistent and value maximizing.

STEPS IN RATIONAL DECISION MAKING

MODEL • Define The Problem. • Identify The Decision Criteria. • Allocate Weights To The Criteria. • Develop The Alternatives. • Evaluate the Alternatives. • Select the best Alternative.

ASSUMPTIONS OF THE MODEL

• Problem Clarity • Known Options • Clear Preferences • Constant Preferences • No Time Or Cost Constraints • Maximum Pay off