DECISION MAKING PROCESS IN MANAGEMENT

DECISION MAKING PROCESS IN MANAGEMENT

  16:39    Rahul R

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THE DECISION MAKING PROCESS

1. Awareness of problem
2. Diagnosis and state the problem
3. Develop the alternatives
4. Evaluate the alternatives
5. Select the best alternatives
6. Implement and verify the decision

Awareness of a problem

n  The manager must become aware that a problem exists and that it is important enough for managerial action

n  Disparity between what is and what should be

n  Managers must identify the gaps between the current and desired state of affairs

n  The emphasis should be on defining the questions in the right way

n  There may be multifarious caueses for an organizational problem

n  Monitor the decision making environment, understand the possible causes and try to define the real problem carefully

Diagnosis and state the problem

n  Once aware of a problem, the manager must state the real problem

n  He must try to solve the problem not the symptoms

n  What is the problem?

n  Which problems to solve?

n  What is the real cause of the problem

n  Critical factor analysis

Develop the Alternatives

n  The statement of the problem enables executives to develop alternatives

n  Developing alternative solutions guarantees adequate focus and attention to the problem

n  Creative imagination are required to make sure that the best alternatives are considered before a course of action is selected

n  Divergent thinking

n  Flexible mental framework

Evaluate the alternatives

n  Decision maker tries to outline the advantages and disadvantages of each alternative

n  The opportunity cost method is suggested to evaluate each alternative

n  When one alternative is selected in place of another, the cost of the selected one is measured in terms of the benefits available from the rejected one

n  The strengths and weaknesses of each alternative is evaluated

Select the Best Alternative

n  Selects the alternative that will maximize the results in terms of existing objectives

Implement and verify the Decision

n  Seek feedback regarding the effectiveness of the implemented solutions

n  Feedback allows managers to become aware of the recent problems associated with the solution

n  Establish follow up procedures to evaluate the decisions

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DECISION MAKING IN MANAGEMENT

DECISION MAKING IN MANAGEMENT

  16:35    Rahul R

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A Decision is a  choice from available alternatives

Characteristics of Decision making

n  Goal Oriented

n  Alternatives

n  Analytical-intellectual

n  Dynamic process

n  Pervasive function

n  Continuous activity

n  Commitment of time, effort and money

n  Human and social process

n  Integral part of planning

Goal Oriented

n  Decisions are usually made to achieve some purpose or goal

n  The intention is to move ‘toward some desired state of affairs’

Alternatives

n  A decision should be viewed as ‘a point reached in a stream of action’

n  It is characterized by two activities – search and choice

n  The manager searches for opportunities to arrive at decisions and for alternative solutions

n  Choice leads to decision

Analytical-Intellectual

n  Decision making has both intuitive and deductive logic

n  It contains both conscious and unconscious aspects

n  Decision-making cannot be completely quantified

n  Many decisions are based on emotions or instincts

n  Decision is uniquely human and is the product of deliberation, evaluation and thought

Dynamic process

n  It is a process of using inputs effectively in the solution of selected problems and the creation of outputs that have utility

               It is a process of identifying worthwhile things to do in a dynamic setting

Pervasive Function

n  Decision-making covers every part of an enterprise

n  Decision making is the essence of a manager’s role

Continuous Activity

n  The manager decides things on a continual and regular basis

n  It is not a one shot deal

Commitment of time, effort and money

n  The commitment may be for short-term or long-term depending upon the type of decision

n  Once a decision is made the org moves in a specific direction, in order to achieve the goals

Human and social process

n  Involves intellectual abilities, intuition and judgment

Integral part of planning

n  Decision making is the core of planning

n  Both aim at achieving goals

n  Both are situational in nature

n  Both involves choice among alternatives

n  Both are based on forecasts and assumptions about future risk and uncertainty

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