Course Title: Principles of Management

Course Code: MGT 512

Assignment: DECISION MAKING PROCESS AND
SOLVING A PROBLEM

Submitted To:
Dr. Sharmina Afrin
Associate Professor, School of Business

Submitted By:
Md. Sarwar Hossain Ripon
ID:2193021008
Batch: 50, Program: MBA (Regular)

Submission Date: 06/12/2019

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 DECISION MAKING PROCESS AND SOLVING A PROBLEM

 Introduction to decision making:

A decision can be defined as a course of action purposely chosen from a set of

alternatives to achieve organizational or managerial objectives or goals. Decision
making is an integral part of modern management. Essentially, rational or sound
decision making is taken as primary function of management. Every manager takes
hundreds and hundreds of decisions subconsciously or consciously making it as the
key component in the role of a manager.

Decisions play important roles as they determine both organizational and

managerial activities. Management or manager makes the right choice from or
among two or more alternatives considering or analyzing the different decisional
factors or criteria which affect the choice.

 Decision making process:

When managers make decisions, they follow a step by step process. It includes
eight steps. A set of eight steps which includes identifying decisions criteria,
developing and selecting alternatives evaluating decisions effectiveness. Although
decision making is typically described as choosing among alternatives that view
is too simplistic. But decision making is a comprehensive process, not just a simple
act of choosing among alternatives. The decision making process is as relevant to
any personal decision. It is a corporate action such a decision to utilize technology
in managing client relationship. A set of eight steps can be used to describe both
individual and group decisions.

 The steps of decision-making process:

There are eight steps for decision making process. The name of eight steps are
given below-

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 i. Identification of a problem
ii. Identification of decision criteria
iii. Allocation of weights to criteria
iv. Development of alternatives
v. Analysis of alternatives
vi. Selection of an alternatives
vii. Implementation of the alternatives
viii. Evaluation of decision effectiveness

Now a consumer will use these steps to solve a problem. The problem is-

‘What is the best automobile manufacturer company to purchase car?’- to

illustrate.

 Step-01: Identifying a problem:

The decision making process begins with the existence of a problem or more
specifically a discrepancy between an existing and a desired state of affairs.
Consider, a consumer, who's decided to buy a car. For simplicity's sake assume
that the consumer has medium range budget. Now he/she has a problem. There is a
disparity to choose manufacturing car company. Now the consumer has a decision
to make about the best automobile manufacturer company to purchase car.

 Step-02: Identifying decision criteria:

Once the consumer has identified a problem, the decision criteria is important to
resolving the problem must be identified. Every decision maker has criteria that
guide his or her decision. In example the consumer has to assess what factors are
relevant to his decision. These might include criteria such as car model, car price,
car parts availability, engine condition or mileage, car safety equipment, car
capacity, car brand, color, fuel consumption, car transmission and so more. After
careful consideration, the consumer has decided that car brand, car model, car

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price, fuel consumption, car transmission, availability of car parts, engine
condition and car safely equipment are the relevant criteria’s in his/her decision.

 Step-03: Allocating weights to the criteria:

If the criteria identified in step-2 are not equally important, then the consumer must
weights the items in order to give them the correct priority in the decision. A
simple approach is to give of weight of 10 and then assign weights to the rest
against the standard.Table-1 shows the list of criteria and weights that the
consumer developed for his decision. As it is seen that car brand is the most
important criteria and car safety equipment is the least important in his/her
decision.

Criterion Weight
Car Brand 10
Car Model 9
Car Price 8
Fuel Consumption 7
Car Transmission 6
Availability of Car Parts 5
Engine Condition 4
Car Safety Equipment 3

Table-01: Criterion & weights for consumer’s decision

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  Step-04: Developing Alternatives:

The fourth step requires the consumer to list possible or viable alternatives that
could resolve the problem. There is no need to evaluate the alternatives; only to list
them. The consumer identified eight potential automobile manufacturer companies
as possible choice including SUZUKI, HONDA MOTOR, FORD MOTOR,
HYUNDAI GROUP, NISSAN, MITSUBISHI, TOYOTA GROUP AND TATA
MOTOR.

 Step-05: Analyzing Alternatives:

Once the alternatives have been identified, the consumer must critically analyze
each one. From step-2 and step-3 comparison, the strengths and weaknesses of
each alternatives become evident.Table-2 shows the assessed values that the
consumer gave each of his/her eight alternatives after studying and reading the
latest information from business magazines and articles. The ratings for the
automobile manufacturer companies are based on the personal assessment made by
the consumer. Some assessments can be done objectively. For instance, car brand,
car model, car price and availability of car parts are set by the automobile
manufacturing companies.

The most decisions are involved for the criteria chosen in step-2, the weights given
to the criteria in step-3 and the evaluation of alternatives in step-5. Table-2
represents only an assessment of the eight alternatives against the decision criteria.
It does not reflect the weighting done in step-3.If the consumer multiply each
alternatives by its weight, the consumer gets new form of alternatives(Table-3).The
sum of these scores represents an evaluation of each alternative.

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automobile Car Car Car Fuel Car Availabili Engine Car

manufactu Bran Mod Pric Consumpti Transmissi ty of Car Conditi Safety

d el e on on Parts on Equipme
rer
nt
company
SUZUKI 10 8 7 6 8 5 8 6
HONDA 10 8 8 6 9 7 8 7
MOTOR
FORD 10 9 5 8 9 4 9 9
MOTOR
HYUND- - 10 7 7 7 9 6 8 9
AI
NISSAN 10 8 5 5 7 6 8 8
TOYOTA 10 9 9 8 8 9 9 8
GROUP
TATA 8 7 8 6 6 10 7 4
MOTOR
MITSU- 10 8 6 7 8 6 8 6
-BISHI

Table-02: Assessment values of automobile manufacturer company using

decision criteria

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automobil Car Car Car Fuel Car Availabi Engine Car Tot
e Bra Mod Pri Consumpt Transmiss lity of Conditi Safety al
nd el ce ion ion Car Parts on Equipm
manufact
ent
urer
company
SUZUKI 100 72 56 42 48 25 32 18 393
HONDA 100 72 64 42 54 35 32 21 420
MOTOR
FORD 100 81 40 56 54 20 36 27 414
MOTOR
HYUND- 100 63 56 49 54 30 32 27 411
-AI
NISSAN 100 72 40 35 42 30 32 24 375
TOYOTA 100 81 72 56 48 45 36 24 462
GROUP
TATA 80 63 64 42 36 50 28 12 375
MOTOR
MITSU- 100 72 48 49 48 30 32 18 397
-BISHI

Table-03: Evaluation of automobile manufacturer company against weighted

criteria

 Step-06: Selecting an alternative:

The sixth step is choosing the best alternative from among those considered. From
table-3, the consumer would have chosen Toyota group since it scored highest on

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the basis of the criteria identified, the weights given to the criteria and his
assessment of each automobile manufacturing company. It is the best alternative
and the one should be choose.

 Step-07: Implementing the alternative:

This step is concerned with putting the decision into action. The consumer
performs all the activities to implement the decision into action. The consumer will
buy a car of Toyota Group within his/her budget and check out his/her assessment
criterion.

 Step-08: Evaluating decision effectiveness:

The last step in the decision making process involves evaluating the outcome of the
decision to see if the problem had been resolved. The consumer must evaluate
his/her decision if the problem still existed. If the problem is resolved, then the
decision criteria accomplish the desired result. But if the problem still exists, then
it might require re-doing the whole decision process.

 Conclusion:

Everyone in an organization makes decision but decision making is very important

job. Decision making is part of all management functions. So, it is necessary to
follow decision making process to make correct decision.