5. CONCEPT
The word ‘decision’ has been derived from the
Latin word ‘decidere’ which means a cutting away
or cutting off, or in a practical sense.
‘To decide’ means “to come to a conclusion”
The main objective of decision is to give effective
result which is help to organization to for achieve
its goal.
6. A decision involves a cut alternatives between
those th at are desirable, and those are not
desirable. The decision is a kind of choice of a
desirable alternative.
Lopez has defined a decision as follows:
“ A decision represents judgment; a final resolution
of a conflict of needs, means, or goals; and a
commitment to action made in face of uncertainty
and complexity.
7. Decision making is a process to arrive at a
decision.
The process by which an individual or organization
selects one position or action from several
alternatives.
8. The decision-making process, in a business
context, is a set of steps taken by managers
in an enterprise to determine the planned
path for business initiatives and to set
specific actions in motion.
Ideally, business decisions are based on an
analysis of objective facts, aided by the use
of business intelligence (BI) and analytics
tools.
10. Aspects of decision making
In decision making, three aspects of
human behavior are involved:
• Activities of mind associated
with knowledge,cognition
• The action of the mind implied
by such words as willing,
desire and need
conation
• The aspect of mind associated
with emotion, feeling, mood
and temperament.
affectation
11.
12. Characteristics Or Features
Goal-oriented process
Evaluation of the available alternatives
Selection process
Continuous process
Responsibility of managers
13. Characteristics Or Features
Pervasive
Intellectual exercise because the final
selection is made after thoughtful
consideration.
Art as well as science
Involves a certain commitment (short
run or long run)
14.
15. Basic problems of decision
making
Correctness of decision
(accuracy of information and
ability of the decision-maker)
The decision environment
(a good environment
encourages managers to
take decisions with
confidence instead of
avoiding them.)
Timing of decisions
(If the decisions are not
taken at the right time, they
will not serve any purpose)
16. Effective communication
of decision
(if the decisions are properly
communicated, the
implementation would not be
difficult.)
Participation in decision-
making
(Employees who are likely to
be affected by a decision
should be encouraged to
take part in arriving at the
final decision)
Implementation of
decision
(For implementation, not
merely effective
communication but also
good incentives and
motivation of subordinates
are essential.)
17. Types of managerial
decisions
Programmed and non programmed
decisions
Major and minor decisions
Routine and strategic decisions
Organizational and personal decision
Individual and group decisions
Policy and operating decisions
18. Programmed and non programmed
decisions
Programmed decisions
Programmed decisions are those which are
normally repetitive in nature and are taken as a
routine job and responsibilities.
These types of decisions are made by middle level
management in accordance with some policies,
rules and procedures.
They have short term impact.
For example: – granting a leave to an employee,
purchasing office materials etc.
19. Non-programmed
Non-programmed decisions relate to difficult
situations for which there is no easy solution.
Non-programmed decisions are non repetitively
taken by top executives.
They need to collect data and analyze then and
forecast the strategic plans.
For example, opening of a new branch of the
organisation or a large number of employees
absenting from the organisation or introducing new
product in the market, etc.
20. Major and Minor decisions
Among different
decisions some
decisions are
considerably more
important than others
and are prioritized. They
are called major
decisions.
Major decisions are
taken by top
management.
For example,
replacement of man by
machine, diversification
of product etc
some of the remaining
decisions are
considerably less
important than others
and are not so
prioritized. They are
minor decisions.
Minor decision taken by
office superintendent.
For example, store of
raw materials etc.
21. Routine and strategic
decisions
Routine decisions are
those decisions which are
considered as tactical
decisions. They are taken
frequently to achieve high
degree of efficiency in the
organizational activities.
Routine decisions are
related to the general
functioning of the
organisation. They do not
require much evaluation
and analysis and can be
taken quickly.
For example, parking
facilities, lighting and
canteen etc.
Strategic decisions are
those which are related to
lowering the prices of
products, changing the
product etc. they take more
fund and degree of partials.
Strategic decisions are
important which affect
objectives, organisational
goals and other important
policy matters. These
decisions usually involve
huge investments or funds.
22. Organizational and personal
decision
Organizational decision is
taken by top executives, for
official purpose. They affect
the organizational activities
directly. Authority is also
delegated.
When an individual takes
decision as an executive in
the official capacity, it is
known as organisational
decision.
Personal decisions are
concerned to an employee.
The executives whenever
takes the decisions
personally that is known as
personal decisions.
If decision is taken by the
executive in the personal
capacity (thereby affecting
his personal life), it is
known as personal
decision.
23. Individual and group
decisions
When a single employee is
involved in decision making
it is called individual
decision.
when the decision is of
group taken in a large
organization where
important and strategic
decisions are taken the it is
a group decision.
The main aim in taking
group decisions is the
involvement of maximum
number of individuals in the
process of decision-
making.
24. Policy and operating decisions
Policy decisions are
taken by top level
management to
change the rules,
procedures,
organizational
structure etc and they
have a long term
effect.
Operational decisions
are taken by lower
level management
which have short term
effect and which affect
the day to day
operation of the
organization.
Decisions concerning payment of bonus to employees are a
policy decision. On the other hand if bonus is to be given to the
employees, calculation of bonus in respect of each employee is
an operating decision.
26. Specific Objectives
The need for decision making arises in order to
achieve certain specific objectives.
The starting point in any analysis of decision making
involves the determination of whether a decision
needs to be made.
This may not be considered truly as the first step of
decision process but provides framework for further
decisions.
27. Identification of problem
A Problem is the gap between present
and desired state of affairs on the
subject-matter of decision .
In management, a problem exists
whenever one faces a question whose
answer involves doubt and
uncertainity.
Problem
identification
Diagnosis
analysis
28. Search for alternatives
A problem can be solved in several ways, however,
all the ways are not equally satisfying. Therefore,
the decision maker must try to find out the various
alternatives available in order to get the most
satisfactory results of a decision.
A decision maker can use several sources for
identifying alternatives:
His own past experience,
Practices followed by others,
Using creative techniques
29. Evaluation of alternatives
For evaluation two approaches can be followed:
(a) constraint on alternatives
(b) grouping of alternatives of similar nature
(a) constraint on alternatives : The decision maker
develops a list of limits that must be met by a
satisfactory solution. He may treat these limits as
constraints, that is, he may check proposed
alternatives against limits, and if an alternative
does not meet them, he can discard it.
30. (b) grouping of alternatives of similar nature: in this
approach, the various alternatives can be grouped
into classes on some specific criteria important to
decision making.
A representative alternative from one group
may be selected for future analysis. Then having
found the group that shows up the best, decision
maker can concentrate on alternatives within this
group.
31. Choice of alternative
Choice aspect of decision making is
related to deciding the most
acceptable alternative which fits with
the organisational objectives.
In choosing an alternative, we can
follow three approaches :
Experience
Experimentation
Research and analysis
32. Action
Once the alternative is selected, it is
put into action.
Implementation of decision requires
the communication to subordinates,
getting acceptance of subordinates
over the matters, and getting their
support for putting the decision into
action.
33. Results
When the decision is put into action, it
brings certain results.
Results provide indication whether
decision making and its
implementation is proper.
34. Effective Decision
Three aspects of effective decision :-
Action Orientation
Goal Orientation
Efficiency in
implementation
36. Brainstorming
“The best way how to have a good idea
is to have many ideas”
Means of generating ideas.
Can be used to identify alternatives,
obtain a complete list of items and to
solve problems.
37.
38. Nominal group technique
In a nominal group technique, the team divides
itself into smaller groups and generates ideas.
Possible options are noted down in writing and the
team members further discuss these to narrow
down the possible choices they would like to
accept.
Team members then discuss and vote on the best
possible choice.
The choice that receives the maximum votes is
accepted as the group decision.
39. Delphi method
In Delphi technique of decision making,
members do not have face-to-face
interaction for group decision.
The decision arrived at through written
communication in the form of filling up
questionnaires often through mail.
40. In this method of decision-making, the facilitator allows
team members to individually brainstorm and submit
their ideas. Other team members do not know the
owner of the ideas.
The facilitator then collects all the inputs and circulates
them among others for modifying or improving them.
This process continues until a final decision is made.
In the above example, you can have a facilitator who
collects strategies and passes them on to the others
without revealing to whom the strategy belongs. Later,
the facilitator collects the improvised strategies and
chooses the best one.
41. Multi-voting
It starts with a round of voting where an individual
casts his vote for the shortlisted options. Each
individual can cast one vote at a time. The options
with the maximum number of votes are carried to
the next round. This process is repeated until a
clear winning option is obtained.
The strategy that receives the maximum number of
votes is considered final.
42. Electronic meeting
Here, the decision-making process takes
place virtually with the help of technology.
Skype call with the client.
43. Principles of decision making
Principle of Alternatives
Distinguish between real options and false options.
Differentiate between risk and uncertainty.
Draw up your ideal criteria before looking at available
options.
Participation of employees.
