Decision Making

Decision defined
• Decision is a choice made between two or more
available alternatives.

• Decision making is the process of choosing

the best alternative for reaching objectives.
Types of Decisions
Programmed Decisions Non-programmed Decisions

• These are routine and • These are typically one-

are repetitive. shot decisions that are
usually less structured
• It requires less time. than programmed.

• And unlike programmed

decisions, these are
mostly long-term.
The Responsibility for Making
Organizational Decisions
The responsibility for Making
Organizational Decisions
Many different kinds of decisions must be made
within an organization such as how to
manufacture a product, how to maintain
machines, how to ensure product quality, and
how to establish advantageous relationships
with customers.
Because organizational decisions are so varies,
some type of rational must be developed to
stipulate who within the organization has the
responsibility for making which decisions
One such rational is based primarily on two
factors:

• The scope of the decision is the proportion, the

broader the scope of the decision is said to be.
• Levels of management are simply lower-level
management, middle-level management and
upper-level management.

The rationale for designating who makes which

decisions is that the broader the scope of a
decision, the higher the level of manager
responsible for making that decision.
Consensus is one method a manager can use in
getting a group to arrive at a particular decision.

It is an agreement on a decision by all the

individuals involved in making that decision. It
usually occurs after lengthy deliberation and
discussion by members of the decision group,
who maybe either all managers or a mixture of
managers and subordinates.
Elements of Decision Situation
Decision Makers
They are the individuals or groups that actually
make the choice among alternatives.
Weak decision makers usually have one of the
following orientations:
1. Friendly
2. Suppressive
3. Advertisement
4. Marketing-Oriented
Goals to be served
The goals that decision makers seek to
attain. These should often be
organizational objectives.
Relevant Alternatives
A relevant alternative is one that is
considered feasible for solving an existing
problem and for implementation.
Ordering of Alternatives
The decision situation requires a process or
mechanism for ranking alternatives from
most desirable to least desirable.
Choice of Alternatives
This is the actual choice between available
alternatives. This choice establishes what
we call decisions.
Decision-Making Conditions
Decision-Making Conditions: Risk and
Uncertainty
Risks
• A probability or threat of a
damage, injury, liability, loss,
or other negative occurrence
that is caused by external or
internal vulnerabilities and
that may be neutralized
through preemptive action.
Uncertainty
• Situation where the current state of
knowledge is such that:
1. the order or nature of things is
unknown,
2. the consequences, extent, or
magnitude of circumstances,
conditions, or events is
unpredictable, and
3. credible probabilities to possible
outcomes cannot be assigned.
Although too much uncertainty is
undesirable, manageable
uncertainty provides the freedom
to make creative decisions.
Decision-Making Conditions: Risk and
Uncertainty
Risk Uncertainty

• Refers to situations in which • Refers to situations where the

statistical probabilities can be probability that a particular
attributed to alternative outcome will occur is not
potential outcomes. known in advance.
Decision-Making Conditions: Risk and
Uncertainty
Risk Uncertainty

• Risk means danger or threat • Uncertainty means hesitation

one might feel in doing some or ambiguity about certain
work. thing.

• Risk can be related to • Uncertainty can be touched

occurrences with low with 100% confidence.
probability.