Nathaniel M. Dagsa Jr.

PMG210 Section B
19-MPMG-038 Dynamics and Techniques in Decision Making

REFLECTION PAPER
CHAPTER I

TOPIC 1 - MANAGERIAL DECISION MAKING

A decision is the conclusion of a process by which one chooses between two or
more available alternative courses of action for the purpose of attaining a goal(s). The
process is called decision making. Managerial decision making is synonymous with the
whole process of management.

Other functions of management such as organizing and controlling can also be

viewed as composed of making decisions. A decision is an act of choice wherein a
manager forms a conclusion about what must be done under a given situation. A
decision represents a course of behaviour chosen from a number of possible
alternatives.

Decision making involves two or more alternatives because if there is only one
alternative, there is no decision to be made. A decision is a course of action or inaction
selected to meet the requirements of a solution (i.e., problem). Decision may also be
conceived as a conclusion that a manager has reached so as to know what he (or
others) should do in future (or later on).

The future must be seen at least in generality, if the decision is to be properly

oriented in terms of goals. Decision making is an intellectual activity, because it calls for
both judgement and imagination to select one from among many alternatives.

Throughout the management cycle, it is required to supply, financial, technical or

other information as an input to help making decisions at higher management levels, for
achieving maximum return on the assets of the business enterprise. Decisions are
usually made to attain the objectives of the business. In business, whether the
enterprise is big or small, changes in condition occur, shifts in personnel take place,
unforeseen contingencies arise.

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Nathaniel M. Dagsa Jr. PMG210 Section B
19-MPMG-038 Dynamics and Techniques in Decision Making
Moreover, just to get wheels started and to keep them moving, decisions must be
made. Every aspect of management functions, such as planning, organizing, and
control is determined by decisions, the result of which is the performance in the
organization. Decision making is vital to all management activities. It helps set definite
objectives, prepare plans of action, determine organizational structure, motivate
personnel and introduce innovations.

TOPIC 2 - DECISIONS UNDER RISK AND UNCERTAINTY

The quality of the decisions made in an organization will dictate the success or
failure of the said business. So all the available information and alternatives must be
studied before arriving at an important decision. The process of decision making will
help a great deal. Another factor that affects these decisions is the environment in which
they are taken. There are a few different types of environments in which these decisions
are made. And the type of decision making environment has an impact on the way the
decision is taken. Broadly there are three basic types of decision making environment.
Let us take a brief look at each of them.

Certainty

Such type of environment is very sure and certain by its nature. This means that
all the information is available and at hand. Such data is also easy to attain and not very
expensive to gather. So the manager has all the information he may need to make an
informed and well thought out decision. All the alternatives and their outcomes can also
be analyzed and then the manager chooses the best alternative. Another way to ensure
an environment of certainty is for the manager to create a closed system. This means
he will choose to only focus on some of the alternatives. He will get all the available
information with respect to such alternatives he is analyzing. He will ignore the other
factors for which the information is not available. Such factors become irrelevant to him
altogether.

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Nathaniel M. Dagsa Jr. PMG210 Section B
19-MPMG-038 Dynamics and Techniques in Decision Making
Uncertainty

In the decision making environment of uncertainty, the information available to

the manager is incomplete, insufficient and often unreliable. In an uncertain
environment, everything is in a state of flux. Several external and random forces mean
that the environment is most unpredictable. In these times of chaos, all the variables
change fast. But the manager has to make sense of this mayhem to the best of his
ability. He must create some order, obtain some reliable data and make the best
decision as per his judgment.

Risk

Under the condition of risk, there is the possibility of more than one event taking
place. Which means the manager has to first ascertain the possibility and probability of
the occurrence or non-occurrence of the event. The manager will generally rely on past
experiences to make this deduction. In this scenario too, the manager has some
information available to him. But the availability and the reliability of the information is
not guaranteed. He has to chart a few alternative courses of actions from the data he
has.

TOPIC 3 - DECISION MAKING, SYSTEMS, MODELING AND SUPPORT

Decision-making is some formalized or non-formalized choice, allowing reaching

a fixed partial goal or moving in its direction. Is carried out by a technical device or a
person and based on the comparison and evaluation of options.

Goal – final result, which the subjects expect to obtain using the choice. Study of
the problem of decision-making in complex system is carried out in a scientific discipline
called systems analysis. In the most general sense, the theory of optimal decision is a
set of analytical and numerical methods, focused on finding the best options from a
variety of alternatives and avoiding their exhaustive search.

An important concept of systems analysis is the integrity of the system. Some

phenomena can only be understood by studying the whole object of study (the

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Nathaniel M. Dagsa Jr. PMG210 Section B
19-MPMG-038 Dynamics and Techniques in Decision Making
organism, system, etc.) in its entirety. For example, we can not perceive a piece of
music by studying only its individual sounds and beats. This phenomenon is defined in
science by the term “emergence” (from the English: Emergence – nascence,
appearance of new): the existence in a system the integral properties not possessed by
its individual elements. The emergence is a criterial feature of the system.

The feature of emergence is non-additivity properties of the system, the non-

applicability of the principle of superposition, the nonlinear coupling between the
properties of the system and its individual elements. The appearance of emergence is
the result of elements synergy (enhancing of properties). In fact, it is nothing else as a
well-known dialectical law of the transformation of quantity into quality. The emergence
is due to the interaction of elements (subsystems) within the operating system, which as
a whole reveals inherent only to it a new quality and regularity.

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