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DECISION
MAKING
DIMACALI, JHUNEL ANGEL E.
CONTENT SUMMARY

I. Decision Making
II. Types of Decision
III. Negotiations
IV. Examples of Decision Making in management
V. Decision Making Steps
VI. Decision Making Model
VII. Approaches to Decision Making
VIII.Centralisation
IX. Decentralisation
X. Recentralization
XI. Bureaucracy
 Please Take
Down Notes
And
Listen Carefully
 DECISION MAKING
 The process of examining your
possibilities options, comparing
them, and choosing a course of
action.
 Decision making process is continuous and indispensable
component of managing any organization or business activities.

 The better choices you make, the better decision-maker you’ll

become.
 It is the heart of all the management functions. (Nickels)
 Some decisions are easy like. . .

What to eat on breakfast?

What to wear?
 Some decisions are difficult like. . .

Choosing a career
Choosing good friends
Changing a job
In every situation you have to
search for. . .
EXAMPLES OF DECISION
MAKING IN MANAGEMENT

1. IN HUMAN RESOURCE
2. IN PRODUCTION
3. IN MARKETING
4. IN CLIENT SERVICING
1. IN HUMAN RESOURCE

• People who are experienced and adept in their fields

such as software development, marketing, operations,
procurement, and logistics.

• Talented location-independent workers capable of

delivering the required technical support and services
online.
2. IN PRODUCTION

• Decide how much capacity installation is required to

meet demand effectively.

• Identify the right equipment for the purpose and the

workforce to run the production processes.

• Aims to increase production sustainably so that you

have the flexibility of scaling up or down without
incurring a high cost.
3. IN MARKETING

Rebranding activities are strong decision-making

skills examples that take into account company
values, products, target audiences, cultural and
social sensibilities, and business aspirations.
4. IN CLIENT SERVICING

It is important to move with the times. The

client or project that worked at the beginning might
not be feasible once you grow beyond a certain
stage. Hence, tough decisions need to be taken
now and then.
TYPES OF DECISION

1. PROGRAMMED DECISION
2.NON-PROGRAMMED DECISION
TYPES OF DECISION
1. PROGRAMMED DECISION
> is one that is fairly structured or recurs with some
frequency (or both).
> Many decisions regarding basic operating systems and
procedures and standard organizational transactions fall
into this category.
> McDonald’s employees are trained to make the Big Mac
according to specific procedures.
> Starbucks and many other organizations used programmed
decisions to purchase new supplies (coffee beans, cups
and napkins).
TYPES OF DECISION continuation. . .
2. NON-PROGRAMMED DECISION
> Is one that is unstructured and occurs much less often
than a programmed decision.
> Most of the decisions made by top managers involving
strategy and organization design are non-programmed.

> Handled by techniques such as judgment, intuition, and

creativity.
 NEGOTIATIONS
 Can be defined as a process of bargaining by which
agreement is reached between two or more parties.

 We all negotiate every day in a wide

range of work and social situations.

 Aims to explore the situation

to find a solution that is
acceptable to both parties.
DECISION MAKING
STEPS
 Identify
the
problem

List
Evaluate alternativ
es

Implemen
Select
t the
the best
chosen
alternativ
alternativ
e
e

Decision Making Steps

 The first step is to
recognize there is
a problem and a
decision must be
made. Some
people just react to
problems, but good
managers seek to
understand the
problem.
Decision Making Steps
 The technique
“brainstorming” is an
example of creative
thinking that can take
place between a manager
and the subordinates. In
brainstorming, everyone
comes up with as many
alternatives as possible

Decision Making Steps

 Evaluating is part of selecting.
As part of the evaluation, you
should list the potential
effects of each choice. You
should also weigh the
advantages and
disadvantages. Discuss those
effects and make the decision
based on what is best for the
organization.

Decision Making Steps

 Put the alternative into
action. This is critical. All
of your successful
analysis won’t do any
good if you are afraid to
act. Whether the
implementation is easy or
hard, you must take
action.

Decision Making Steps

 We evaluated the
alternatives, but now this
final step means to
evaluate the action. This
is done with feedback.
Collect the best feedback
you can. If the problem is
not resolved, a manager
must go back through the
process and look at other
alternatives.
Decision Making Steps
DECISION MAKING
MODEL
 RATIONAL

CREATIVE DECISION
MAKING INTUITIVE
MODEL

BOUNDED RATIONALITY
  Series of steps that decision
RATIONAL makers should consider if
their goal is to maximize the
quality of their outcomes.

 In order to make sure you

make the best choice, going
DECISION through the formal steps of the
MAKING rational decision-making
MODEL model may make sense.
STEPS IN RATIONAL RATIONAL
DECISION MAKING 4. Generate a list of
MODEL possible alternatives.
5. Evaluate those
1. Define the problem alternatives.
DECISION
2. Identify the criteria 6. Determine the best
MAKING solution.
you will use to judge
possible solutions. MODEL 7. Implement the
3. Decide how decision
important each 8.Evaluate the
criterion is. decision
BOUNDED RATIONALITY

 Model of decision making recognizes

the limitations of our decision-
making processes.
DECISION
MAKING
 An important part of the bounded rationality
MODEL approach is the tendency to satisfice, which
refers to accepting the first alternative that
meets your minimum criteria.
  It refers to arriving at decisions without
INTUITIVE conscious reasoning.
 They don’t decide between two or three
options and choose the best one. Instead,
they consider only one option at a time.
 The intuitive decision-making model argues
DECISION that, in a given situation, experts making
decisions scan the environment for cues to
MAKING recognize patterns.
MODEL  The key point is that only one choice is considered
at a time. Notices are not able to make effective
decisions this way because they do not have
enough prior experience to draw upon.
  Creativity is the generation of
CREATIVE new, imaginative ideas.
 With the flattening of organizations and
intense competition among organizations,
individuals and organizations are driven to
be creative in decisions ranging from cutting
costs to creating new ways of doing
DECISION
business.
MAKING
 creativity and innovation are not the same
MODEL
thing. Innovation begins with creative ideas,
but it also involves realistic planning and
follow-through.
 DECISION MAKING MODEL
OPEN
 If the manager operates in
unknown environment, then it is
called open decision making.
 The manager does not know all
decision alternatives.
 Outcome of the decision is not
known.
 No method, rule or model is
available to make decision.
 Difficult to decide objective or
goal of decision.
CLOSED
 If the manager operates is a known
environment, then it is called closed
decision making.
 The manager knows all decision
alternatives.
 Outcome of the decision is known.
 Method, rule or model is available to
make decision.
 Easy to decide objective or goal of
decision.
WHICH DECISION MAKING MODEL SHOULD I USE?
Decision making model Use this model when:

❖ Information on alternatives can be gathered and

RATIONAL quantified.
❖ The decision is important.
❖ You are trying to maximize your outcome.

❖ The maximum criteria are clear

BOUNDED RATIONALITY ❖ You do not have or you are not willing to invest
much time in making the decision.
❖ You are not trying
❖ Goals are unclear
INTUITIVE ❖ There is time pressure and analysis paralysis would
be costly.
❖ You have experience with the problem.
❖ Solutions to the problem are not clear.
CREATIVE ❖ New solutions need to be generated.
❖ You have time to immerse yourself in the issues
RATIONAL APPROACH

A systematic, step-by-step process for making decisions.

 State the situational goal

 Identify the problem
 Determine the decision type
 Generate alternatives
 Evaluate alternatives
 Choose an alternative
 Implement the plan
 Control: measure and adjust
RATIONAL APPROACH continuation. . .

Weaknesses
Strengths
- Rigid underlying
- Forces decision in
assumptions often-unrealistic.
a logical,
- Information limited by time or
sequential manner
cost constraints, manager’s
- In-depth analysis
ability to process information.
enables choose on
- Not all alternatives are easily
the basis of
quantified.
information rather
- Outcomes unknown due to
than emotion or
predictability of future.
special pressure.
BEHAVIORAL APPROACH

- Assumes decision makers operate with bounded rationality

rather than with perfect rationality.
-Bounded rationality: decision making based upon a
meaningful subset of relevant information.

Characteristics:
- Procedures and rules of thumb reduce uncertainty.
- Sub-optimizing – accepting less than best outcome.
- Satisfying – choosing first-encountered alternative that
solves the problem.
PRACTICAL APPROACH

- Combines the step of the rational approach with the conditions

in the behavioral approach to create a more realistic approach,

HYBRID APPROACH

- Managers use a combination of rational, behavioral

and practical approach to make decisions.
- Research has shown that speed in decision making is
not indicative of the consideration of fewer alternatives
by managers.
 PERSONAL APPROACH

- Individual decision making can be viewed as a process of conflict

resolution.

The Janis-Mann “Conflict Model” Characteristics:

1. Deals only with important life decisions.
2. Procrastination and rationalization are human
mechanisms for avoiding decision making.
3. The fear of making an unsound decision can be a
deterrent to make any decision.
4. It provides for self reactions.
5. Decision makers can be ambivalent about alternatives.
 AUTHORITY

Decision-making authority means an individual or body vested

with the authority to make recommendations or act on application
requests. The final decision-making authority is the one which has
the authority to act on a request by approving or denying it.

RESPONSIBILITY
 Responsible decision-making is the ability to make constructive
choices about one's own behavior and social interactions in an
ethically responsible way. It includes being able to: identify
problems. accurately analyze situations and options.
 The higher the management level is, the bigger and the more
complicated decision making becomes.
CENTRALISATION

Centralization refers to a setup in which the decision-making

powers are concentrated in a few leaders at the top of the organizational
structure. Decisions are made at the top and communicated to lower-level
managers for implementation.

ADVANTAGES DISADVANTAGES
1. A clear chain of command 1. Bureaucratic leadership

2. Focused vision 2. Remote control

3. Reduced costs 3. Delays in work

4. Quick implementation of decisions 4. Lack of employee loyalty

5. Improved quality of work

DECENTRALISATION

 Decentralized decision-making is any process where

the decision-making authority is distributed throughout a larger
group. It also connotes a higher authority given to lower level
functionaries, executives, and workers. This can be in any
organization of any size, from a governmental authority to a
corporation.

 Escalated decisions can decrease quality due to the lack of

local context, plus changes to the facts on which they were
based that occur during the waiting period.
RECENTRALIZATION

- Means back to centralization.

- If the situation so demands, the top management may hold back the
power of authority from the lower level managers which were earlier
decentralized.

BUREAUCRACY
Standardization is the basis which
every bureaucratic structures build on, and the
subjective bureaucracy consist of standard routine and operational
tasks and procedures characterized by high formal rules and
centralization of order, and the decisions are taken through a series of
commands inside the organization.
REFERENCES
 https://www.slideshare.net/ashgrover/decision-making-ppt?next_slideshow=2
 https://www.slideshare.net/rajivbajaj/decision-making-negotiating
 https://www.gocivilairpatrol.com/media/cms/Lesson_Plan_35__Planning_and_Decisi_5A5628
811B98A.pdf
 https://www.slideshare.net/wicaksana/decision-making-16151977
 https://slideplayer.com/slide/12630152/