CHAPTER 4

DECISION-MAKING

DECISION-MAKING AS A MANAGEMENT RESPONSIBILITY

Decisions must be made at various levels in the workplace. They are also made at the various stages in the management process. If certain resources must be used, someone must make a decision authorizing certain persons to appropriate such resources.

Decision-making is a responsibility of the manager. It is understandable for managers to make wrong decisions at times.

The wise manager will correct them as soon as they are identified. The bigger problem is the manager who cannot or do not want to make decisions. These types of managers are dangerous and should be replaced with qualified ones.

WHAT IS DECISION-MAKING?

Decision-making may be defined as the process of defining the problem and identifying and choosing alternative courses of action in a manner appropriate to the demands of the situation.

Decision-making is regarded as the heart of all the management functions.

THE DECISION-MAKING PROCESS

1.
Diagnosing the problem

If the manager wants to make an intelligent decision, his first move must be to identify the problem. If the manager fails in this aspect, his next moves will be useless.

If the manager is not able to identify the real problem, the solution he will offer will be irrelevant and may even be costly and destructive. Being able to identify the real problem is tantamount to having the problem half-solved.

WHAT IS A PROBLEM?

A problem exists when there is a difference between the actual situation and the desired situation.

2.

Analyzing the environment

The environment where the organization is situated plays a very significant role in the success or failure of such an organization. It is, therefore, very important that an analysis of the environment is undertaken.

The objective of environmental analysis is the identification of constraints, which may be spelled out as either internal or external limitations.

Examples of internal limitations are as follows:

1.Limited funds available for the purchase of equipment 2.Limited training on the part of the employees 3.Illegal designed facilities 4.Irrelevant organization structure

Examples of external limitations are as follows:

1.Product patents are controlled by other organizations 2.A very limited market for the companys products and services exists 3.Strict enforcement of local zoning regulations.

COMPONENTS OF THE ENVIRONMENT

The environment consists of two major concerns: Internal External

Internal environment- consists of the organizational activities within a firm that surrounds decision-making.

Important aspects of the internal environment:

Organizational aspects Personal aspects like like organizational recruitment practices and structure, policies, incentive systems procedures, rules, ability of management Marketing aspects like Financial aspects like product strategy and liquidity and profitability promotion strategy

External environment-refers to variables that are outside the organization and not typically within the short-run control of the management.

Forces comprising the external environment of the firm

Government Labor unions Supplies Banks Public Competitors Climate Professional managers

3.
Articulating the problem or opportunity

A problem is really an opportunity to improve ones standing. If one wants to benefit from solving a problem or exploiting an opportunity, a solution that will effectively address the situation is required. A good solution must be chosen from among several alternatives.

Breaking the problem into several components will simplify the task of generating alternatives. When at times it becomes difficult to offer a solution for the entire problem, individual solutions may be used to deal with the components.