ROLE OF INFORMATION IN DECISION MAKING

Information system is the system that has important tools to support, analyse, delivery and adding
reliability to the organization. Also this helps to solve the many business problems. Information
plays a vital role in decision-making. Even to take very simple decisions, we need information. In
fact, decision–making means, choosing one course of actions rather than another and finding an
appropriate solution to a new problem posed by a dynamic world
Decision making is the essence of the management. In other words whatever a manager does it is
decision making and information assist every manager in providing the required information. To
understand the role played by information in decision-making, we have to understand how
decisions are taken.
OBJECTIVES OF INFORMATION
 Deliver the right information to right person at right time in right form.
 To ensure that such information are accurate and timely.
 To organize information for planning, budgeting and decision making.
 To help the organization put in effective management system and improve utilization of
resources.

EXAMPLE
When you drive your car to a certain destination and there is only one road, you do not have to
make a decision. The road will take you there. But if you come to a fork (cross-ways), you have
to decide which way to go. In fact, whenever more than one alternate action is available, a
decision must be made.
STAGES OF DECISION MAKING
 Identification and structuring of problems or opportunity
 Putting the problems or opportunity in context
 Generation of alternatives
 Choice of best alternatives
VARIOUS STAGES OF DECISION MAKING
 Identification and structuring of problems or opportunity

One needs information to identify a problem and put it in a structured manner. This phase
involves detecting and interpreting signs that needs your attention. Without information about a
problem or opportunity, the decision-making process does not even start.
 Putting the problems or opportunity in context

Identify the preliminary information needs and then obtain information. Without information
about the context in which the problem has occurred, one cannot take any decision on it. In a
way, the information about the context defines the problem.
 Generation of alternatives

Information is a key ingredient in the generation of alternatives for decision-making. One has to
have information about possible solutions to generate alternatives.
For example, if the objective of the company is growth of business, then company has various
possible alternatives, like expansion in same product line, diversification in new area and so on.
 Choice of best alternatives

The positive and negative points are examined thoroughly. The consequences of each alternatives
must be carefully examined before making choice. Based on the information about the suitability
of the alternatives, a choice is made to select the best alternative. Information is thus, very
important to take decisions.
This 4 phase process is not necessary to be in linear. You’ll often find tit useful or necessary to
cycle back to an earlier phase. When choosing an alternative in the choice of best alternative
phase for example, you might become aware of another possible solution. Then you would have
to go back to the putting the problems or opportunities in context, include the new found solution,
return to generation of alternatives phase and compare it with the new solution to the others.
PHASE 1
First we get information about a problem, format it into a structure and then factor in the
information about the context in which the problem has occurred. Like in the above case instead
of the child being at the middle of the road and crossing it, the driver would have seen the child
about to cross over with a few steps only he would probably not have braked to stop but would
have slowed down, as he would have calculated that by the time the vehicle reaches the crossing
stage, the child would already have passed. So if the problem was structured as 'how to not hit the
child crossing the road?', and if the child was at the middle of the road, the driver would have
braked but had the child been at (say) at ninety per cent completion level of crossing the road, the
driver would have only slowed down and not braked to stop.
PHASE 2
Therefore, we see that the context has a major role in the decision-making and information is
required both about the problem and about the context in which the problem occurred.
PHASE 3
The next stage for the decision maker would be to generate alternatives. In the driver's case such
possible alternatives would be:
i) to stop by braking
ii) to slow down
iii) to take a sharp turn towards left or right to avoid the child
iv) To drive the vehicle on to the footpath and out of the road to avoid collision, etc.

PHASE 4
So the decision-maker generates these possible solutions to the problem at hand based on
information about such possible solutions. Each of the alternatives represents a possible solution,
which one can generate if one has information about them. In the case of the driver, obviously, he
needs knowledge and information to generate these alternatives, i.e., to stop by breaking the
driver would need to know that braking stops the vehicle. If he is unaware of this crucial
information he would not have been able to generate this alternative. So information is vital for
generation of alternatives.
Thus, we can see that information is the key to the decision making process, without
information and the right kind of information decision-making is not possible. Information
plays a crucial role in every stage of the decision-making process.
Simon’s Model of Decision-Making
According to Herbert A. Simon’s model, there are three phases in decision making process,
namely,
 Intelligence
 Design
 Choice

Intelligence Phase
In this phase, decision maker searches the environment and finds out the conditions that demand
decision making .for this, he obtain the information from various sources, analyses it and
identifies the problem or opportunities.
In this phase ,decision maker does the following
 Collect data from inside the organisation
 Collect data from outside the organisation
 Collect information on possible ways to solve the problem

Problem searching
Problem is defined as the difference between something that is expected and reality.
Problem formulation
When the problem is identified, there is always a risk of solving the wrong problem .It is very
important that the problem is well understood and clearly stated.
Design phase
During this phase course of actions are invented, developed and analyzed. In this phase, manager
tries to understand the course of the problem and finds a possible solution and tests the solution
for feasibility.
In this phase, following activities are performed
 Organize the data
 Select a model to process the data
 Produce reasonable, potential course of action

Choice phase
During this phase one alternative or course of action is selected from all the possible
alternatives known and implemented .for selecting alternatives, a detailed analysis of each and
every alternative is made. However at any phase, the decision –maker may return may return to
a previous phase.