DECISION MAKING

• DM is an integral part of every Managers job.

• It is his primary responsibility and identity.

• DM permeates every task of managers, exists

in every part of an organisation and associates
with every action.

• Latin word ‘decidere’ meaning – ‘Cutting away’

• It the process of examining your possibilities,

options, comparing them and choosing a course
of action.
It is the cognitive process, every DM process produces a
final choice . It can be an action or an opinion .

It begins when we need to do something but we do not

know what.

Therefore, DM is a reasoning process which can be

rational or irrational, and can be based on assumptions.

According to Hayens and Massie -

“A decision is a course of action which is consciously

chosen for achieving a desired result”
 In order to:
• Plan
• Organize • Achieve
• Direct goals
• Control • Objectives
Resulting in:
Managers-
• Effectiveness
• Efficiency
 Construct : clear picture of precisely what must be
decided.

 Compile : a list of requirements that must be met.

 Collect : information on alternatives that meet the

requirements

 Compare : alternatives that meet the requirements.

 Consider : the “what might go wrong’; factor with

each alternative.

 Commit : to a decision and follow through with it.

 Characteristics/Nature
1) Making Choices
2) Logical sequence
3) Involves rationality
4) A judgment
5) Narrowing choice
6) Iterative activity(recurring)
7) Action commitment
8) Purposive (means not ends)
9) Human and social process
10)Directed at solving problems
1. Heart of Administration
2. Synonymous with managing
3. Universal mark of a manager
4. First managerial skill and responsibility
5. Basis of managerial functions
6. Core of planning
7. Building sound organizational structure
8. Provides direction
9. Basis of effective control
10. Path to success
11. DecisivenessTo face challenges
12. Means to problem solving
A. Organizational Decisions:
◦ Managers have to make decision in official capacity.
◦ These can be delegated to others

Non-organizational Decisions:
◦ Managers have to make decision in their individual
capacity.
◦ These can not be delegated to others
B. Basic Decisions:
◦ Unique and one-time which involve long range
commitments and huge investments.
◦ These can be policy decisions made at higher levels

Routine Decisions:
◦ Managers have made decision which have minor effect
on the welfare of the concern.
◦ These are repetitive and require little thought.
C. Programmed Decisions: routine, almost
automatic process.
◦ Managers have made decision many times before.
◦ There are rules or guidelines to follow.
◦ Example: Deciding to reorder office supplies.

Non-programmed Decisions: unusual

situations that have not been often addressed.
◦ No rules to follow since the decision is new.
◦ These decisions are made based on information, and a
manger’s intuition, and judgment.
◦ Example: Should the firm invest in a new
technology?
D. Individual Decisions:
◦ Made by manager in capacity as a manager.
◦ Most of the decisions are taken by a single
individual

Group Decisions:
◦ As complexity increases major decisions require
exchange of ideas
◦ Individuals participate as group in reaching a
decision.
E. Strategic Decisions:
◦ Characterized as novel, complex and open ended
◦ They involve establishing enterprise goals and
selecting strategies
◦ Fall within the purview of top management

Tactical Decisions:
◦ Are less important and routine type.
◦ Situation is given and requirements are evident.
◦ Only problem is to find economical adaptation of
known resources
 Barriers/Problems in Good DM

1. Hasty - Making quick decisions without having

much thought.
2. Narrow – D M is based on very limited
information.
3. Scattered - Our thoughts in making decisions
are disconnected or disorganized.
4. Fuzzy - Sometimes, the lack of clarity on
important aspects of a decision causes us to
overlook certain important considerations.
5. Heuristics - A heuristic is a sort of mental
shortcut or rule of thumb that we utilize
when making a judgment or decision.

For example, gamblers often judge the probability

that they will win their next game based on whether
or not they won the last game.