WINSEM2020-21 STS2102 SS VL2020210500010 Reference Material I 02-Apr-2021 B.tech II Yr 2102 2202 Decision Making-Converted-37!64!17

For Non-Programmed Decision the major Elements
The main elements of decision-making are as follows
1. Concept of Best Decision

Rational decisions must conform the basic concept of good decision. Mentions three
keys to rational decision-making:
(i) Conceptualization,
(ii) Information,
(iii) Prediction.
are the three main keys to rational decision-making. The problem should be
thoroughly analysed and all possible alternatives be folly considered.
Rational decisions require:
(a) Intelligence,
(b) Insight, and
(c) Lot of experience.
SMART TRAINING RESOURCES INDIA PVT. LTD. © 2018 SMART Training Resources Pvt. Ltd.
2. Organisational Environment of the Company
Organisation environment also exert great influence on decision-

making. Some organisations believe in rigid centralisation while others
have faith in decentralisation and leave the routine decision-making
function with the departmental heads.
Further, in the interest of the company it has been suggested that the
policy matter decision must be left with the top management and leave
the ordinary day to day routine matter decisions to the various
departmental heads. External, Social, Political and Economic
environment also influence decision-making. But instable political
conditions in the country are not conducive to important decision-
making.
3. Psychological Elements
In psychological elements personal traits like preferences, intellectual

maturity experience, educational standard, social and religious
designation and status etc., of the person responsible for the decision-
making also exert great influence on decision-making.
Further in company the manager’s habits, temperament, social environ-

ment, upbringing domestic life and political learning’s all have to trace
his choice of alternative, consequently on his decisions.
4. Timing of Decisions
Decisions must be taken at the appropriate time keeping in view the

prevailing conditions. Marketing aim should also be taken into
consideration and time required for achieving the aim. Any decision
taken in time leaves a lasting impression on the mind of those who are
affected by the decision.
5. Communication of Decisions
When a particular decision has been taken it must be communicated

properly in time to the persons concerned. Decision should be
communicated to the subordinate executives in a courteous, simple and
understandable language. There should not be any ambiguity in the
language written. It should be in a vary simple language.
6. Participation of Employees
Participation of the employees in decision-making makes its

implementation easier. Employees participation has certain advantages
and it ensures loyalty of the employees towards the organisation. It
arouses the feeling of oneness with the company and the decision taken
are considered as superior. It helps in enhancing the efficiency of the
organisation which helps in attaining the goals of the organisation.
Decision-making conditions
Case Study1
Our restaurants face customer complaints as a routine part of doing

business. Because this is a recurring problem for restaurants (it may be
regarded as a programmed decision).
Solution???
In general there are three different types of condition under which

managers take decisions.
The first condition is certainty, which means that the available

alternatives and their costs or benefits are certain. In other words,
managers know with certainty that particular alternatives will lead to
definite outcomes and there is no element of doubt.
The second condition is risk. Under the risk condition, all available
choices and their potential costs and benefits are known, but the
outcomes are sometimes in doubt. So, while the alternatives are known,
the outcomes are unknown. An example of a risk condition is the throw
of a die: the alternatives (one to six) are known, but the outcome is not
known – there is a one-in-six chance of each number coming up.
Solution???
The final condition is uncertainty, under which the available

alternatives, the likelihood of their occurrence and the outcomes are all
unknown. Decisions made under uncertainty are the most difficult to
take because of this lack of concrete knowledge. Such decisions tend to
be ambiguous, intangible and highly unusual.
Solution Case Study 1
To deal with this problem, the restaurant might have a policy stating
that every time they receive a valid customer complaint, the customer
should receive a free dessert, which represents a decision rule. Making
strategic, tactical, and operational decisions is an integral part of the
planning function in the P-O-L-C (planning-organizing-leading-
controlling) model.
Barriers to making good decisions
As managers attempt to make good decisions they are faced with many
challenges and barriers. Decisions can be framed either in terms of
gains or losses, or by a reference point against which the various options
can be evaluated. A manager normally applies a decision frame to a
decision. A decision frame refers to the perception held by the manager
in terms of gains or losses associated with the outcome of a decision.
Consequently, the same outcome could be viewed as a gain or a loss
depending on the perception and reference point used.
For example, if an employee received a Rs1,000 bonus when everyone

else received a Rs.2,000 bonus, should this be viewed as a gain or as a
loss? The answer depends on the individual and whether the reference
point is the employee’s original salary (gain) or a comparison with
others (loss).
Management Decision Making: Negative Scenario
In the mid-1980s Coca-Cola was the biggest-selling soft drink worldwide,

yet the company decided to change the formula and introduce a ‘new’ Coca-
Cola to the market. The result was disastrous: consumers disliked the new
formula and preferred the old one. As a result, after three months the
company had to reintroduce the old formula, using the brand name Coca-
Cola Classic. What events led to the company taking such a poor decision?
The decision was the product of a negative decision frame. Coca-Cola’s

share of the market had been steadily declining and the company’s options
were to make no changes and continue to decline, or to take the risky option
to change the formula. In essence, the choice was between certain loss or
risk, and the company chose the latter. As it turned out, though, the
decision the company made resulted in more short-term losses than
anticipated.
END OF SESSION - 3
SESSION - 4
Decision Making – 5 Major Benefits to Planning
While decision making without planning is fairly common, it is often

not appealing. Planning allows decisions to be made in a much more
comfortable and intelligent way. Planning even makes decisions easier
by providing guidelines and goals for the decision. We might even say
that planning is a type of decision simplification technique.
Decision makers will find five major benefits to planning:
1. Planning allows the establishment of independent goals:

When decisions are made to achieve some planned vision, manager
finds himself steering the organization. When decisions are taken in
response to some external crises, like lowering sales in the market, the
external forces steer the management decision. By planning for
decision, “management by firefighting” is replaced by a conscious and
directed series of choices.
2. Planning provides a standard of measurement:

A plan provides something to measure against, so that you can discover
whether or not you are achieving or heading toward your goals. As the
proverb says, if you don’t know where you’re going, it doesn’t matter
which way you go.
3. Planning converts values to action:
When you are faced with a decision, you can consult your plan and
determine which decision will help advance your plan best. Decisions
made under the guidance of planning can work together in a coherent
way to advance company or individual goals.
4. Planning is useful in emergency situations, too:
When a crisis arises, a little thought about the overall plan will help
determine which decision to make that will not only help resolve the
crisis but will also help advance the overall plan. Without a plan, crises
are dealt with haphazardly and decisions are made which may
ultimately be in conflict with each other.
5. Planning allows limited resources to be committed in an
orderly way:
Budgets, time, effort, manpower-all are limited. Their best use can be
made when a plan governs their use.
A simple example would be planning to buy a house or a car. Rather

than having to decide between buying the item right now with all cash
or never having it, you can plan to buy it over several years by making
payments. Or, you might combine this plan with the plan to buy a
smaller house and add rooms later as they could be afforded. By
planning you can thus accomplish things that might otherwise look
impossible.
Nature of Planning
• Planning is goal oriented – Plans arise from objectives.

Objectives provide guidelines for planning.
• It is a primary function – Planning provides the basis foundation

from which all future management functions arise.
• Planning is All Pervasive: Planning is a function of all managers.

It is needed and practiced at all managerial levels. Planning is
inherent in everything a manager does.
• Planning is a Mental Exercise: Planning is a mental process

involving imagination, foresight and sound judgment. Planning
compels managers to abandon guesswork and wishful thinking. It
makes them think in a logical and systematic manner.
Nature of Planning
• Planning is a Continuous Process: Planning is continuous. It is a

never-ending activity. It is an ongoing process of adjustment to change.
There is always need for a new plan to be drawn on the basis of new
demands and changes in the circumstances.
• Planning Involves Choice: Planning essentially involves choice

among various alternative courses of action. If there is one way of doing
something, there is no need for planning. The need for planning arises
only when alternatives are available.
• Planning is Forward Looking: Planning means looking ahead and

preparing for the future. It means peeping into the future, analyzing it
and preparing for it. Managers plan today with a view to flourish
tomorrow. Without planning, business becomes random in nature and
decisions would become meaningless, adhoc choices.
Nature of Planning
• Planning is Flexible: Planning is based on a forecast of future events.

Since future is uncertain, plans should be reasonably flexible. When market
conditions change, planners have to make necessary changes in the existing
plans.
• Planning is an Integrated Process: Plans are structured in a logical way

wherein every lower-level plan serves as a means to accomplish higher level
plans. They are highly interdependent and mutually supportive.
• Planning Includes Efficiency and Effectiveness: Plans aim at

deploying resources economically and efficiently. They also try to accomplish
what has been actually targeted. The effectiveness of plans is usually
dependent on how much it can contribute to the predetermined objectives.
Once a manager set goals and develops plans, his next function is organizing
that are identified as necessary by the plan to reach the goal.
Organizing – Coordinating Activities and Resources
Organizing involves determining how activities and resources are to be

assembled and coordinated. The purpose of an organization structure is
to create an environment for the best human performance.
The structure must define the task to be done. The rules so established
must also be designed in light of the abilities and motivations of the
people available. Organizing is deciding where decisions will be made,
who will do what jobs and tasks, who will work for whom, and how
resources will assemble.
Common Organization Structures
Managements need to seriously consider how they wish to structure the

organization. Some of the critical factors that need to be considered are
• The size of the organization
• Nature of the business
• The objectives and the business strategy to achieve them
• The organization environment
• Functional Organization Structure
The functional structure is the most common model found in most
organizations. Organizations with such a structure are divided into
smaller groups based on specialized functional areas, such as
operations, finance, marketing, Human Resources, IT, etc.
Geographic Organizational Structure
Organizations that cover a span of geographic regions structure the

company according to the geographic regions they operate in. This is
typically found in organizations that go beyond a city or state limit and
may have customers all across the country or across the world.
Matrix Organizational Structure
A matrix structure is organized to manage multiple dimensions. It

provides for reporting levels both horizontally as well as vertically and
uses cross-functional teams to contribute to functional expertise. As
such employees may belong to a particular functional group but may
contribute to a team that supports another program.
Divisional
Larger companies that operate across several horizontal objectives sometimes use a
divisional organizational structure.
This structure allows for much more autonomy among groups within the
organization. One example of this is a company like General Electric. GE has many
different divisions including aviation, transportation, currents, digital and renewable
energy, among others.
The working relationships — vertical and horizontal associations between individuals and
groups — that exist within an organization affect how its activities are accomplished and
coordinated.
END OF SESSION - 4
Thank You …

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For Non-Programmed Decision the major Elements

The main elements of decision-making are as follows

1. Concept of Best Decision

Organisation environment also exert great influence on decision-

In psychological elements personal traits like preferences, intellectual

Further in company the manager’s habits, temperament, social environ-

Decisions must be taken at the appropriate time keeping in view the

When a particular decision has been taken it must be communicated

Participation of the employees in decision-making makes its

Our restaurants face customer complaints as a routine part of doing

In general there are three different types of condition under which

The first condition is certainty, which means that the available

The final condition is uncertainty, under which the available

For example, if an employee received a Rs1,000 bonus when everyone

In the mid-1980s Coca-Cola was the biggest-selling soft drink worldwide,

The decision was the product of a negative decision frame. Coca-Cola’s

While decision making without planning is fairly common, it is often

1. Planning allows the establishment of independent goals:

2. Planning provides a standard of measurement:

4. Planning is useful in emergency situations, too:

A simple example would be planning to buy a house or a car. Rather

• Planning is goal oriented – Plans arise from objectives.

• It is a primary function – Planning provides the basis foundation

• Planning is All Pervasive: Planning is a function of all managers.

• Planning is a Mental Exercise: Planning is a mental process

• Planning is a Continuous Process: Planning is continuous. It is a

• Planning Involves Choice: Planning essentially involves choice

• Planning is Forward Looking: Planning means looking ahead and

• Planning is Flexible: Planning is based on a forecast of future events.

• Planning is an Integrated Process: Plans are structured in a logical way

• Planning Includes Efficiency and Effectiveness: Plans aim at

Organizing involves determining how activities and resources are to be

Managements need to seriously consider how they wish to structure the

• The size of the organization

• Nature of the business

• The objectives and the business strategy to achieve them

• The organization environment

• Functional Organization Structure

Organizations that cover a span of geographic regions structure the

A matrix structure is organized to manage multiple dimensions. It

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