1. JAMNALAL BAJAJ INSTITUTE OF MANAGEMENT STUDIES
HRM Class Assignment: Prof Bharat Nadkarni
MMM Second Year, Third Semester
Submitted By
Sagar Patel
Roll No – 14 M 508

2. DECISION MAKING PROCESS CASE STUDY
Most organisational decisions are not made in a logical, rational manner. Most decisions do not begin with the
careful analysis of a problem, followed by systematic analysis of alternatives, and finally implementation of
solutions. On the contrary, decision processes are characterised by conflict, coalition building, trained error,
speed, and mistakes. Managers operate under many constraints that limit rationality, hence, intuition and
hunch often are the criteria for choice.
Another important idea is that individuals make decisions, but organisational decisions are not made by a
single individual. Organisational decision making is a social process. Only in rare circumstances do managers
analyse problems and find solutions by themselves. Many problems are not clear, so widespread discussion
and coalition building take place. Once goals and priorities are set, alternatives to achieve those goals can be
tried. When a manager does make an individual decision, it is often a small part of a larger decision process.
Organisations solve big problems through a series of small steps. A single manager may initiate one step but
should be aware of the larger decision process to which it belongs.
The greatest amount of conflict and coalition building occurs when problems are not agreed on. Priorities
must be established to indicate which goals are important and what problems should be solved first. If a
manager attacks a problem other people do not agree with, the manager will lose support for the solution to
be implemented. Thus, time and activity should be spent building a coalition in the problem identification
Stage of decision making. Then the organisation can move towards solutions. Under conditions of low
technical knowledge, the solution unfolds as a series of incremental trials that will gradually lead to an overall
solution.
The most novel description of decision making is a garbage can model. This model describes how decision
processes can seem almost random in highly organic organisations such as learning organisations. Decisions,
problems, ideas and people flow through organisations and mix together in various combinations. Through
this process, the organisation gradually learns. Some problems may never be solved, but many are, and the
organisation will move toward maintaining and improving its level of performance.
Finally, many organisations must make decisions with speed, which means staying in immediate touch with
operations and environment. Moreover, in an uncertain world, organisations will make mistakes, and
mistakes made through trial and error should be encouraged. Encouraging trial and error increments
facilitates organisational learning. On the other hand, an unwillingness to change from a failing course of
action can have serious negative consequences for an organisation. Norms for consistency and the desire to
prove one’s decision correct can lead to continued investment in a useless course of action
Question
1. Why would managers in high-velocity environments worry more about the present than the
future?
2. Do you think intuition is a valid way to make important business decisions? Why or Why not?
(Answers for each can be minimum 2 pages. Appropriate examples if possible, would be
appreciated.)
NOTE: For writing answer of above question some of the online Management
books on decision making from online GOOGLE LIBRARY have been referred
apart from above case study. ( Decision Making Process: Concepts and Methods by Denis
Bouyssou, Didier Dubois, Henri Prade, Marc Pirlot, Handbook of Decision Making by Paul C. Nutt, David C.
Wilson, Harvard Business Review on Decision Making by Peter Ferdinand Drucker, Decision Making Under
Stress: Emerging Themes and Applications by Rhona H. Flin, Leadership and Decision-making by Vroom, Victor
Harold, Developing Decision-making Skills for Business by Julian Lincoln Simon)

3. Q- 1. Why would managers in high-velocity environments worry more about the present than the
future?
They would worry more about the present than the future because the rate of change is extreme and/or
discontinuous. Such an environment makes accurate prediction unlikely. Managers can overcome from this
by making strategy for achieving company's objective which not only help in present scenario even helps for
future growth.
The Strategic Management Process
A company’s strategy is the “game plan” management has for positioning the company in its chosen market
arena, competing successfully, pleasing customers, and achieving good business performance.
The Five Tasks of Strategic Management
1. Forming a strategic vision of what the company’s future business makeup will be and where the
organization is headed – so as to provide long-term direction, delineate what kind of enterprise the
company is trying to become, and infuse the organization with a sense of purposeful action.
2. Setting objectives – converting the strategic vision into specific performance outcomes for the
company to achieve.
3. Crafting a strategy to achieve the desired outcomes.
4. Implementing and executing the chosen strategy efficiently and effectively.
5. Evaluating performance and initiating corrective adjustments in vision, long-term direction,
objectives, strategy, or implementation in light of actual experience, changing conditions, new ideas,
and new opportunities.
Terms to Remember
 Strategic vision – a view of an organization’s future direction and business makeup; a guiding
concept for what the organization is trying to do and to become.
 Organization mission – management’s customized answer to the question “What is our business
and what are we trying to accomplish on behalf of our customers?” A mission statement broadly
outlines the organization’s activities and present business makeup. Whereas the focus of a strategic
vision is on a company’s future, the focus of a company’s mission tends to be on the present.
Developing a
Strategic
Vision and
Business
Mission
Setting
Objectives
Crafting a
Strategy to
Achieve the
Objectives
Implement-
ing and
Executing
the Strategy
Evaluating
Performance
, Monitoring
New
Developmen
ts and
Initiating
Corrective
Adjustments
Revise as
Needed
Revise as
Needed
Improve/
Change as
Needed
Improve/
Change as
Needed
Recycle to
1,2,3 or 4 as
Needed

4. Strategic Plan– a statement outlining an organization’s mission and future direction, near-term and long-term
performance targets, and strategy.
The Three Strategy Making Tasks
1. Developing a Strategic Vision and Mission: The First Direction Setting Task
Management’s views and conclusions about the organization’s future course, the customer focus it should
have, the market position it should try to occupy, and the business activities to be pursued constitute a
strategic vision for the company. A strategic vision indicates management’s aspirations for the organization,
providing a panoramic view of “what businesses we want to be in, where we are headed, and the kind of
company we are trying to create.” It spells out a direction and describes the destination.
2. Strategic Visions are Company Specific, Not Generic
The whole idea behind developing a strategic vision/mission statement is to set an organization apart from
others in its industry and give it its own special identity, business emphasis, and path for development.
The best vision statements are worded in a manner that clarifies the direction in which an organization needs
to move.
3. The Mission or Vision Is Not to Make a Profit
To understand a company’s business and future direction, we must know management’s answer to “make a
profit doing what and for whom?”
The Elements of a Strategic Vision
 Defining what business the company is presently in
 Customer needs, or what is being satisfied
 Customer groups, or who is being satisfied
 The technologies used and functions performed – how customer’s needs are satisfied (fully
integrated, partially integrated, or specialized)
 To have managerial value, strategic visions, business definitions, and mission statements
must be narrow enough to pin down the company’s real arena of business interest.
 Deciding on a long-term strategic course for the company to pursue
 Communicating the vision in ways that are clear, exciting and inspiring
Establishing Objectives: The Second Direction-Setting Task
Setting objectives converts the strategic vision and directional course into specific performance targets.
Objectives represent a managerial commitment to achieving specific outcomes and results. They are a call for
action and for results.
The experiences of countless companies and managers teach that companies whose managers set objectives
for each key result area and then press forward with actions aimed directly at achieving these performance
outcomes typically outperform companies whose managers exhibit good intentions, try hard, and hope for
the best.

5. What Kind of Objectives to Set
Objectives are needed for each key result managers deem important to success. Two types of key result areas
stand out: those relating to financial performance and those relating to strategic performance.
Financial Objectives
 Growth in revenues
 Growth in earnings
 Higher dividends
 Wider profit margins
 Higher returns on invested capital
 Attractive EVA performance
 Strong bond and credit ratings
 Bigger cash flows
 A rising stock price
 Attractive and sustainable increased in market value added (MVA)
 Recognition as a “blue chip” company
 A more diversified revenue base
 Stable earnings during periods of recession
Strategic Objectives
 A bigger market share
 Quicker design-to-market times than rivals
 Higher product quality than rivals
 Lower costs relative to key competitors
 Broader or more attractive product line than rivals
 A stronger reputation with customers than rivals
 Superior customer service
 Recognition as a leader in technology and/or product innovation
 Wider geographic coverage than rivals
 Higher levels of customer satisfaction than rivals
Crafting a Strategy: The Third Direction-Setting Task
Strategy making is all about how – how to achieve performance targets, how to out compete rivals, how to
achieve sustainable competitive advantage, how to strengthen the enterprise’s long-term business position,
how to make management’s strategic vision for the company reality. A strategy is needed for the company as
a whole, for each business the company is in, and for each functional piece of the business. An organization’s
overall strategy emerges from the pattern of actions already initiated and the plans managers have for fresh
moves.
Strategy is inherently action-oriented; it concerns what to do and when to do it.

6. The Strategy-Making
Business Strategies
Responsibility of business-level
general managers
Corporate
Strategy
Responsibility of
corporate-level
managers
Functional Strategies
(R&D manufacturing, marketing, finance, HR, etc.)
Responsibility of heads of major
functional activities within a business unit or division
Operating Strategies
(regions and districts, plants, departments within functional areas)
Responsibility of plant managers, geographic unit managers, and lower-level supervisiors
Corporate Strategy
Corporate strategy is the overall managerial game plan for a diversified company. Corporate strategy extends
company-wide – an umbrella over all a diversified company’s businesses. It consists of the moves made to
establish business positions in different industries and the approaches used to manage the company’s group
of businesses.
Crafting corporate strategy for a diversified company involves four kinds of initiatives:
1. Making the moves to establish positions in different businesses and achieve diversification. This
piece of corporate strategy establishes whether diversification is based narrowly in a few industries or
broadly in many industries and whether the different businesses will be related or unrelated.
2. Initiating actions to boost the combined performance of the businesses the firm has diversified into.
Management’s overall strategy for improving companywide performance usually involves pursuing rapid-
growth strategies in the most promising businesses, keeping the other core businesses healthy, initiating
turnaround efforts in weak-performing businesses with potential, and divesting businesses that are no longer
attractive or that don’t fit into management’s long-range plans.
3. Pursuing ways to capture the synergy among related business units and turn it into competitive
advantage. Related diversification presents opportunities to transfer skills, share expertise or facilities, and
leverage a common brand name, thereby reducing overall costs, strengthening the competitiveness of some
of the company’s products, or enhancing the capabilities of particular business units.
4. Establishing investment priorities and steering corporate resources into the most attractive
business units. This facet of corporate strategy making involves channeling resources into areas where
earnings potentials are higher and away from areas where they are lower.

7. Business Strategy
The term business strategy (or business-level strategy) refers to the managerial game plan for a single
business. For stand-alone single business company, corporate strategy and business strategy are one and the
same.
The central thrust of business strategy is how to build and strengthen the company’s long-term competitive
position in the marketplace. Toward this end, business strategy is concerned principally with:
1. Forming responses to changes under way in the industry, the economy at large, the regulatory
and political arena, and other relevant areas.
2. Crafting competitive moves and market approaches that can lead to sustainable competitive
advantage.
4. Building competitively valuable competencies and capabilities.
5. Uniting the strategic initiatives of functional departments.
6. Addressing specific strategic issues facing the company’s business.
BUSINESS
STRATEGY
(The action plan
for managing a
single line of
business.)
BASIC COMPETITIVE
APPROACH
Ÿ Low cost/Low price
Ÿ Differentiation (what
kind?)
Ÿ Focus on a specific
market niche
Moves to secure a
competitive advantage
(accelerate R&D, improve
product design, add new
features, introduce new
technologies, boost quality
or service, outcompete rivals
on the basis of superior
resources and competitive
capabilities)
Moves made to respond
to changing industry
conditions and other
emerging developments
in the external
environment
Geographic market
coverage and degree of
vertical integration (full,
partial)
Collaborative
partnerships and
strategic alliances with
others
K
EY
FU
N
C
TIO
N
A
L
STR
A
TEG
IES
TO
B
U
ILD
C
O
M
PETITIVELY
VA
LU
A
B
LE
R
ESO
U
R
C
E
STR
EN
G
TH
S
A
N
D
C
A
PA
B
ILITIES
Manufacturing
& Operations
Marketing,
Promotion and
Distribution
R&D/Technology
Human Resources &
Labor Relations
Financial Approaches
The three most frequently used competitive approaches are:
1. Striving to be the industry’s low cost producer (thereby aiming for a cost-based advantage over
rivals)
2. Pursuing differentiation based on such advantages as quality, performance, service, styling,
technological superiority, or unusually good value
3. Focusing on a narrow market niche and winning a competitive edge by doing a better job than
rivals of serving the special needs and tastes of niche members
Internally, business strategy involves taking actions to develop the capabilities and resource strengths
needed to achieve competitive advantage.

8. A distinctive competence is something a firm does especially well in comparison to rival companies. A
distinctive competence is a basis for competitive advantage because it represents expertise or capability that
rivals don’t have and cannot readily match.
Functional Strategy
The term functional strategy refers to the managerial game plan for a particular functional activity, business
process, or key department within a business. A company needs a functional strategy for every competitively
relevant business activity or organizational unit.
The primary role of a functional strategy is to support the company’s overall business strategy and
competitive approach. A related role is to create a managerial road map for achieving the functional area’s
objectives and mission.
Operating Strategy
Operating strategies concern the even narrower strategic initiatives and approaches for managing key
operating units (plants, sales districts, distribution centers) and for handling daily operating tasks with
strategic significance (advertising campaigns, materials purchasing, inventory control, maintenance,
shipping). Operating strategies, while of limited scope, add further detail and completeness to functional
strategies and to the overall business plan.
Uniting the Strategy-Making Effort
A company’s strategic plan is a collection of strategies devised by different managers at different levels in the
organizational hierarchy. Management’s direction setting effort is not complete until the separate layers of
strategy are unified into a coherent, supportive pattern.
Level 1
Responsibility of corporate-level
managers
Overall Corporate
Scope and Strategic
Vision
Corporate-Level
Objectives
Corporate-Level
Strategy
Level 2
Responsibility of business-level
general managers
Business-Level
Strategic Vision and
Mission
Business Level Objectives Business-Level
Strategy
Level 3
Responsibility of heads of major
functional activities within a
business unit or division
Functional Area
Missions
Functional Objectives Functional Strategies
Level 4
Responsibility of plant managers,
geographic unit managers, and
managers of frontline operating
units
Operating Unit
Missions
Operating Unit Objectives Operating Strategies

9. The Factors That Shape a Company’s Strategy
Societal,
political,
regulatory,
and
community
citizenship
consideratio
ns
Competitive
conditions
and overall
industry
attractive-
ness
Company
opportuni-
ties and
threats
External Factors
A mix of considerations that determine a
company's strategic situation
Company
resource
strengths,
weak-
nesses,
competen-
cies and
competitive
capabilities
Personal
ambitions,
business
philosophy
and ethical
principals of
key
executives
Shared
values and
company
culture
Internal Factors
Crafting a
strategy that
fits the
overall
situation
Identification
and
evaluation of
strategy
alternatives
Conclusions
concerning
how internal
and external
factors stack
up; their
implications
for strategy
Linking Strategy with Ethics
Every strategic action a company takes should be ethical. Every business has an ethical duty to each of five
constituencies: owners/shareholders, employees, customers, suppliers and the community at large.
Tests of a Winning Strategy
Three tests can be used to evaluate the merits of one strategy over another and to gauge how good a strategy
is:
1. The Goodness of Fit Test: A good strategy is tailored to fit the company’s internal and external
situation – without tight situational fit, there’s real question whether a strategy appropriately
matches the requirements for market success.
2. The Competitive Advantage Test: A good strategy leads to sustainable competitive advantage.
The bigger the competitive edge that a strategy helps build, the more powerful and effective it is.
3. The Performance Test: A good strategy boosts company performance. Two kinds of performance
improvements are the most telling for a strategy’s caliber: gains in profitability and gains in the
company’s competitive strength and long-term market position.

10. Strategic options that clearly come up short on one or more of these tests are candidates to be dropped from
further consideration. The strategic option that best meets all three tests can be regarded as the best or most
attractive strategic alternative.
There are of course some additional criteria for judging the merits of a particular strategy: completeness and
coverage of all the bases, internal consistency among all the pieces of strategy, clarity, the degree of risk
involved, and flexibility.
Approaches to Performing the Strategy-Making Task
The Master Strategist Approach – Some managers take on the role of chief strategist and chief
entrepreneur, single-handedly exercising strong influence over assessments of the situation, over the strategy
alternatives that are explored, and over the details of strategy. Master strategists act as strategy commanders
and have a big ownership stake in the chosen strategy.
The Delegate-It-To-Others Approach – Here the manager in charge delegates pieces and maybe all of the
strategy-making task to others. The manager then personally stays in touch with how the strategy
deliberations are progressing, offer guidance when appropriate, smiles or frowns as trial balloon
recommendations are informally run by him/her for reaction, and reserves final approval until the strategy
proposals are formally presented. (Problems with this approach include: Subordinates may not have either
the clout or the inclination to tackle changing major components of the present strategy. It sends the wrong
signal, that strategy development isn’t important enough to warrant a big claim on the boss’s personal time
and attention. A manager can end up too detached from the process to exercise strategic leadership if the
group’s deliberations bog down in disagreement or go astray.
The Collaborative Approach – This is a middle approach whereby the manager enlists the help of key peers
and subordinates in hammering out a consensus strategy. The strategy that emerges is the joint product of all
concerned, with the collaborative effort usually being personally led by the manager in charge. The
collaborate approach is well-suited to situations where strategic issues cut across traditional functional and
department lines, where there’s a need to tap into the ideas and problem-solving skills of people with
different backgrounds, expertise, and perspectives, and where it makes sense to give as many people as
feasible a participative role in shaping the strategy and help win their wholehearted commitment to
implementation.
The Champion Approach – The idea is to encourage individuals and teams to develop, champion, and
implement sound strategies on their own initiative. Executives serve as judges, evaluating the strategy
proposals needing their approval. This approach works well in large, diversified corporations. Corporate
executives may well articulate general strategic themes as organization wide guidelines for strategic thinking.
With this approach, the total strategy ends up being the sum of the championed initiatives that get approved.
Q- 2. Do you think intuition is a valid way to make important business decisions? Why or Why not?
Approaches to decision making can be quite diverse, ranging from classical, rationalistic, decision making
processes to a less structured, intuitive, decision making style.
Rational decision making processes consist of a sequence of steps designed to rationally develop a desired
solution. Intuitive decision making is almost the opposite, being more instinctive, subjective and subconscious
in nature.

11. One of the principle assumptions of the rational decision making process is that human beings make rational
decisions. However, this is not always the case! There are usually wide ranging factors which determine our
decisions, many of which are not rational. This is especially so when we remember that management is about
dealing with people. In addition, many situations require decisions to be made with incomplete and/or
insufficient information. Often management requires quick decision making, or judgements made under
pressure.
It is in this context that a more intuitive approach often develops. All except the most mechanistic of rational
decisions must include some element of subjective judgement. Our decisions are based on judgments which
are affected by a range of factors including our experiences, values, attitudes, and emotions. Judgement
heuristic decision making uses simple rules and approximate short cuts to help us arrive at decisions.
Drawing particularly on our experiences and attitudes, it does this by helping us to cut through the excessive
information that can overload and delay decisions.
Whilst useful in helping us to simplify complex situations, we must also remember that the subjective nature
of heuristic decision making must also introduce elements of bias. This can be illustrated in the different
types of judgement heuristics. For example:
 Representative heuristics - where judgements are made on the basis of things with which we are
familiar, or inferred from “representative” characteristics;
 Anchor heuristics - where decision are based on an anchor like a “value” and then adjustments are
made from that start point;
 Availability heuristics - where judgements are built on the information that is readily available, or
on easily recalled memory/experience.
It’s interesting to relate this theory to the work of successful manager and author, Jack Welch. Hailed as
“manager of the century” by Fortune, Welch describes his approach to decision making in this quote:
“Sometimes making a decision is hard not because it is unpopular, but because it comes from your gut
and defies a ‘technical’ rationale. Much has been written about the mystery of gut, but it’s really just
pattern recognition, isn’t it. You’ve seen something so many times you just know what’s going on this
time. The facts may be incomplete or the data limited, but the situation feels very, very familiar to
you.”
Welch captures the essence of intuition and decision making. In contrast to rational decision making,
intuitive decisions are less structured and involve feelings and perceptions rather than analysis and facts.
Welch’s approach summarizes other theoretical elements of intuition and decision making. These include:
 Pattern recognition - where configurations and relationships are recognised in information and
events;
 Similarity recognition - where similarities and differences, in past and present situations, are
identified;
 Sense of salience - recognising (or assuming) the importance of events and information, and the
affect this has on judgements.
Making “Sense” of Intuition and Decision Making
As managers trained or educated to be rational thinkers, we may be wary of combining intuition and decision
making. However, academic research into decision making theory indicates there is a sound logic in
reconciling the two. This is particularly important when we remember that decision making is rarely a
precise, safe, fully informed process. Though not useful in every situation, wherever there is any ambiguity or
doubt in our decision making, then there may be a place for intuitive thinking.
An interesting area of development relating to intuition and decision making, is the work on sense
making from organizational theorist Karl Weick. Weick’s work relates to our discussion of rational and
intuitive perspectives, particularly the inclination of managers to think rationally about decisions. This
despite the fact that these decisions are based as much on what they don’t know as on what they know! In

12. such circumstances there is much to be said for decision making informed by intuition or heuristics. Weick
suggests:
“When people create maps of an unknowable, unpredictable world, they face strong temptations
towards either over confident knowing or overly cautious doubt. Wisdom consists of an attitude
towards one’s beliefs, values, knowledge, and information that resists these temptations through an
on-going balance between knowing and doubt”.
“The essence of wisdom in knows that one does not know, in the appreciation that knowledge is
fallible, in the balance between knowing and doubting.”
Perhaps this is only highlighting what great managers know already. As Bob Sutton suggests:
“The best leaders have the courage to act on what they know right now, and the humility to change
their actions when they encounter new evidence. They advocate an ‘attitude of wisdom’. Arguing as if
they are right, and listening as if they are wrong.”
Determining which type of decision making approach to adopt is essential for effective decision making.
However, perhaps knowing how and when to combine rational and intuitive approaches is essential for
effective management.
Judgement, intuition, experience and knowledge all come together when making decisions. Regardless of
whether you believe in intuition and decision making
A rational decision making model provides a structured and sequenced approach to decision making.
Using such an approach can help to ensure discipline and consistency is built into your decision making
process. As the word rational suggests, this approach brings logic and order to decision making.
Our rational decision making model consists of a series of steps, beginning with problem/opportunity
identification, and ending with actions to be taken on decisions made.
First though why not take a look at our comprehensive decision making e-guides with a great half price offer.
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There seems to be a problem with decision making. According to Ohio State University management
professor, Paul C. Nutt, we only get about 50% of our decisions in the workplace right! Half the time they are
wrong, so there is clearly plenty of scope to improve on our decision making processes. Based on his research
into over 300 decisions, made in a range of organizations, he discovered that
“Some tactics with a good track record are commonly known, but uncommonly practiced.”
Why? Well one reason that emerged from his research is that:
“Too often, managers make bad tactical selections ….. Because they believe that following recommended
decision-making practices would take too much time and demand excessive cash outlays.”
Nutt argues that using good decision making practices actually costs very little. Our rational decision making
model is our free tool to help you improve the way you make decisions.
This article is part of our series on decision making. Our first article, types of decision making outlines a range
of decision making approaches. Rational decision making forms part of what we have termed types of decision,
categorized by process. In this category we have put two contrasting approaches, that of rational decision
making and that of judgement or intuitive decision making.

13. A General Rational Decision Making Model
Rational decision making processes consist of a sequence of steps designed to rationally develop a desired
solution. Typically these steps involve:
Identifying a problem or opportunity
The first step is to recognise a problem or to see opportunities that may be worthwhile. A rational decision
making model is best employed where relatively complex decisions have to be made.
The first decision making lesson should be to ask yourself if you really have a problem to solve or a decision
to make
Gathering information
What is relevant and what is not relevant to the decision? What do you need to know before you can make a
decision, or that will help you make the right one?
Analyzing the situation
What alternative courses of action may be available to you? What different interpretations of the data may be
possible? Our Problem Solving Activity uses a set of structured questions to encourage both broad and deep
analysis of your situation or problem.
Developing options
Generate several possible options. Be creative and positive. .
Evaluating alternatives
What criteria should you use to evaluate? Evaluate for feasibility, acceptability and desirability. Which
alternative will best achieve your objectives?
Selecting a preferred alternative
Explore the provisional preferred alternative for future possible adverse consequences. What problems might
it create? What are the risks of making this decision?
Acting on the decision
Put a plan in place to implement the decision. Have you allocated resources to implement? Is the decision
accepted and supported by colleagues? Are they committed to making the decision work?

14. Strengths and Weaknesses of the Rational Decision Making Model
The main strength of a rational decision making model is that it provides structure and discipline to the
decision making process.
It helps ensure we consider the full range of factors relating to a decision, in a logical and comprehensive
manner. However, we should always remember that whilst the model indicates what needs to be done, it’s
often how things are done that characterises effective decision making.
Paul C. Nutt’s research illustrates that bad decisions were usually bad because two things were missing:
1. Adequate participation of stakeholders in the decision making process;
2. Sufficient time spent generating a range of possible solutions.
Too often those who should have been involved weren’t, and solutions were proposed and acted upon too
quickly. Often with disastrous effects!
A second weakness arises if we attempt to use the model in isolation. This is particularly important
where complex or important decisions are involved.
The principle assumption of the rational decision making process is that human beings make rational
decisions. However, there are numerous factors which determine our decisions, many of which are not
rational. In many situations decisions have to be made with incomplete and insufficient information.
Judgement, intuition, experience and knowledge all come together when making decisions.
The essence of management is making decisions. Managers are constantly required to evaluate alternatives
and make decisions regarding a wide range of matters. Just as there are different managerial styles, there are
different decision-making styles. Decision making involves uncertainty and risk, and decision makers have
varying degrees of risk aversion. Decision making also involves qualitative and quantitative analyses, and
some decision makers prefer one form of analysis over the other. Decision making can be affected not only by
rational judgment, but also by nonrational factors such as the personality of the decision maker, peer
pressure, the organizational situation, and others.
Management guru Peter F. Drucker, as quoted in Association Management, identified eight "critically
important" decision-making practices that successful executives follow. Each:
1. Ask "What needs to be done?"
2. Ask "What is right for the enterprise?"
3. Develop action plans
4. Take responsibility for decisions
5. Take responsibility for communicating
6. Focus on opportunities rather than problems
7. Run productive meetings
8. Think and say "we" rather than "I"
NOTE: For writing answer of above question some of the online Management books
on decision making from online GOOGLE LIBRARY have been referred apart from
above case study. ( Decision Making Process: Concepts and Methods by Denis Bouyssou, Didier Dubois, Henri
Prade, Marc Pirlot, Handbook of Decision Making by Paul C. Nutt, David C. Wilson, Harvard Business Review on Decision
Making by Peter Ferdinand Drucker, Decision Making Under Stress: Emerging Themes and Applications by Rhona H. Flin,
Leadership and Decision-making by Vroom, Victor Harold, Developing Decision-making Skills for Business by Julian Lincoln
Simon)