PLANNING FUNCTION OF MGT

– DECISION MAKING

Dr. Mshilla Maghanga

MBA Programme
Faculty of Bzn & Dev. Studies
Gulu University

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Definitions of Decision Making

i. Decision making can be regarded as an outcome of mental

processes (cognitive process) leading to the selection of a
course of action among several alternatives. Every decision
making process produces a final choice. The output can be an
action or an opinion of choice.

ii. Decision making is the study of identifying and choosing

alternatives based on the values and preferences of the
decision maker.

iii.Decision making is the process of sufficiently reducing

uncertainty and doubt about alternatives to allow a
reasonable choice to be made from among them.

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Decision Making:
Principles and techniques
 Decision making is one of the continuous managerial
planning functions and involves the process of
identifying and selecting a course of action from among
many alternatives in order to solve a specific problem or
achieve the intended objective of an organization.

 It is important that managers make rational decisions

which involves appreciating all the alternative courses of
action before making the decision and then choosing the
most appropriate decision.

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 Rational decision making process
Rational decision making goes through the following 6 steps\;

1. Define the problem

 This involves:
i. Identifying the problem
ii. Establishing the cause or source of the problem
iii. Assessing the gravity of the problem from the
individual, department or organizational view point.
1. Data Collection
Get more information regarding the problem i.e.
 How long has it existed
 How far has it affected the orgzn
iv. How many people have been affected?
Use methods like observations, interviews, questionnaires,
assessment forms etc to collect the data. 4
3) Develop alternative solutions
 What can be done about the problem?
 How best can it be solved?
 From these questions list down the alternatives so as to avoid
going for the easy way out which may not be the best option.
 It also avoids working on emotions or avoiding solving the
problem.

4) Evaluate each alternative

 Rank the alternatives to come up with the best one
 Use parameters like merits and demerits of each then pick the
one with the most advantages or least demerits.
 Use cost element ratio to decide on the cost vis-à-vis the
benefits, or
 Capacity of organization/individual /department vis-à-vis the
alternative.
 Whether the alternative is realistic in view of the
circumstances or current environment.

NB: An alternative may have more advantages but in view of

prevailing political environment may not be the best
alternative.
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5) Selecting the best alternative
 Some testing may need to be done.
 Look at past experience if possible to decide on
the alternative
 Experimentation may need to be carried out since
this may be a trial and error method. This method
is thus expensive.
 Research and analysis - This is the best approach
followed by past experience which
experimentation coming last.
6) Deciding and communicating the decision,
• communication must be both vertical and
horizontally.
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 Types of decisions
 All decisions are either:
1) Programmed decisions or
2) Non programmed decisions

1) Programmed Decisions:
 These provide solutions for routine or structured
problems i.e. for day to day challenges.
 They are also called routine decisions.

 There is a frame-work to guide how to make the

decisions.
 They are also said to be operational decisions made
at lower levels within the structure formulated by
top management.
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2) Non-programmed decisions
 These are made to solve problems arising out of
crises or unexpected situations.
 The making of the decisions here has no frame-
work.
 These are normally too big problems, hence they
are made top management.

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 Factors affecting decision making
 These may be positive or negative, internal or external
(a) Internal Factors
1) Importance of the decision – This will influence how fast it is made
2) Number of people involved – this may delay the decision making.
3) Degree of autonomy of the decision makers
4) Rules and procedures that govern the process e.g. for programmed
decisions.
5) Intention of the information needed
6) Consequences of reaching a wrong decision (phobia for wrong
decision)
7) Personalities involved
8) Nature of the organization e.g. its culture, ethics etc.
9) Technical competency required to make the decision
10) The links of the chain of command.
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(b) External Factors
1) Economic situation prevailing – e.g. purchasing power,
inflation rates etc
2) Political dimension
3) Legislative control
4) Social and moral pressures
5) National and international opinion
6) Number of interested parties
7) Extent to opposition to the organization
8) Extent of compliance required by external agencies e.g.
donors
9) Degree of interdependence e.g. ministries in government
depend on each other
10) Level of competition with other organizations
11) Desire to keep a good image or relationship. 10
Observations About Decision
Making
1) Decision making skills are developed through
practice

2) The lower the echelon of command the simpler,

faster, more direct and accelerated the decision
process

3) The ability to rapidly develop solutions to new

problems is based on pattern recognition

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• Intuitive Decision Making (reactive)
Pattern recognition based on previous experience

• Analytical Decision Making (planned)

Calculated selection of alternatives

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• Rely on experience to recognize the essence of a
given situation or problem
• Utilize pattern recognition from previous actions,
observations, and training to develop the solution
• Best way to improve decision making is to improve
pattern recognition, the best way to improve pattern
recognition is to improve. . .

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• Identify possible options
• Analyze all options according to a set criteria
• Calculate a value for all criteria of each option
• Choose the option with highest total criteria
values

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“Tell me and I will forget,
Show me and I may
remember, but involve me
and I will understand”
– Chinese proverb

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