RM - Decision Making and Communication

Segment 2
Topic 4 : Decision Making and Communication
Segment 1
Topic 2 : Data and Information
Segment 1
Segment 1
Segment 1
Segment 1
Decision Making and Communication
Table of Contents:
4.1 Introduction
Learning Objectives
4.2 Decision-Making with MIS
4.3 Communication in Organizations
4.4 Concept Map
4.5 Summary
4.6 Glossary
4.7 Case Study
©COPYRIGHT 2023, ALL RIGHTS RESERVED. MANIPAL ACADEMY OF HIGHER EDUCATION Page No. 1
4.1 Introduction
Information systems help employees and managers make decisions.
Decisions are either for the short term, meant for immediate action, or for the
medium term, where the impacts of decisions are felt over days or weeks, or
for the long term, where impacts are experienced over weeks and months.
Systems are designed specifically for all types of decision-making situations.
Information systems are also used extensively for communication within
organizations. Many forms and types of communication enable the modern
organization to function effectively.
Decision-making and communication are dynamic processes crucial to an
organization’s operation. Information is transmitted between people and
groups through communication. Information is used in decision-making to
provide direction and address issues.
Group decision-making heavily relies on communication. The opinions held
by the group's participants regarding a problem or course of action
predominantly influence collective decisions. Group communication can and
often does lead to changes in individual opinions.
Group decision-making heavily relies on communication. The opinions held
by the group's participants regarding a problem or course of action
predominantly influence collective decisions. Group communication can and
often does lead to changes in individual opinions.
Learning Objectives:
After studying this topic, you will be able to:
• Explain decision-making with MIS
• Differentiate between tactical, operational, and strategic decisions
• Describe the various types of communication
• Explain decision-making with group decision-making heavily relies on
communication.
• Explain decision-making with communication technology
4.2 Decision-Making with MIS

The process of choosing a course of action from among multiple potential
outcomes is known as decision-making.
Any human being must make decisions daily. Regarding it, there is no
exemption. Making decisions in business organizations is a habit and a
process as well.
Successful and effective decisions generate profits, whereas unsuccessful
decisions incur losses. Therefore, the most important process in any firm is
corporate decision-making.
The process of choosing a course of action from among multiple potential
outcomes is known as decision-making. Any human being must make
decisions daily. Regarding it, there is no exemption. Making decisions in
business organizations is a habit and a process as well.
Tactical decisions
An important task of all employees within the organization is to make
decisions about various things. At the lowest level of the organization, the
workers have to decide how to go about their work. Although their work is
usually quite structured, they must choose and evaluate consequences using
the given details. For example, a salesperson may have a fixed route to travel
to meet several clients during the day. However, he still has to decide how to
proceed, given the actual conditions on the ground, how many appointments
he already has, and how many are pending. These are called tactical
decisions. The salesperson has clear objectives and has to make minute, low-
level decisions to achieve those objectives.
Consider another example of a shop-floor assembly line worker. In a typical
manufacturing assembly line, say in a factory that makes automobiles,
workers are given a fixed set of jobs. The worker is given the equipment and
material required for the job and a timeline for completing the work. The
worker also has to attend to other constraints that involve communicating with
the supervisor, adhering to company rules regarding safety, security, health,
and interacting with coworkers. The worker who is doing the job of assembly
within such constraints has to make minute, tactical decisions regarding the
work, like the selection of tools, setting up of tools, use of material resources,
information to be entered into the shop-floor information systems, and the
timing and content of information to be communicated to upstream and
downstream workers, etc.
Another example is a nurse attending to patients in a hospital ward. A typical
nurse has to make many daily decisions regarding patient care and
supporting physicians. The nurse's main tasks may be outlined clearly, which
may include attending to patients on a fixed number of beds, providing them
with timely doses of medication, recording the medication and nutrition given
to the patient in the information systems, assisting the physician with check-
ups and diagnosis, and ensuring the health care provided is according to
the quality norms specified by the hospital. The nurse's decisions will revolve
around all these activities – which jobs to prioritize, when an emergency
occurs, how to proceed, what information to convey to managers and to
attend doctors, and how to coordinate activities with other nurses.
Operational decisions
Managers making decisions with a medium-term scope are often called
operational decisions. These decisions are based on aggregate data and
impact the medium-term activities, which could range from the next few
months to the next few quarters.
Decision support systems often support operational decisions that use
specialized models to provide detailed and carefully analyzed solutions to
decision problems. The following examples show the types of operational
decisions supported by decision support systems:
1. Operations managers can decide on inventory levels to be maintained to
meet the production targets for the firm and also control the amount of working
capital locked into inventory. Decision support tools allow managers to use
mathematical models that rely on current and past inventory and production
levels to precisely predict the quantities of materials in inventory.
2. Finance managers can use decision support tools to determine the best
investment allocations in various market opportunities. Finance managers
must balance the available liquidity against the market risk of investment and
the best returns possible. The tools help answer the question of how much to
invest in what and the possible scenarios that might result from the decisions.
3. Software project managers have to make decisions regarding: (a) how well
projects are progressing, (b) whether they will complete on time, (c) whether
they will be completed within the allocated budget, and (d) whether the
projects will meet the objectives of the customers. Project managers control
the number of people on a project, the money allocated to the project, and
the deliverables of the project. Decision support tools help them visualize and
estimate how the projects will fare, using past data on the current and similar
projects.
4. Decision support tools are used in the strategy function of various
organizations. The tools enable managers to visualize future economic
trends, competitor responses, and industry trends. The tools can also help
simulate the impacts of strategies formulated by the organization. For
example, the impact of introducing new products in a market with many
competitors can be simulated in a computer program that shows how the
products will fare under different price scenarios.
5. Marketing managers can use decision support tools to find the most cost-
effective routes for the sales persons to cover the market. Travel entails costs;
hence, managers want to follow the least cost routes that allow sales
personnel to meet all their customers. This decision is often complicated by
customers making sudden calls to the salesperson or weather or traffic
conditions not permitting some routes.
The traveling salesman's problem
Figure 1 depicts the traveling salesperson problem, an example of an
operational decision. The salesman has to cover all the cities in one tour at
the lowest possible cost.
744 1461
Bhopal Ranchi
1407
Kolkata
Mumbai
2061
2095 1996
1401
Bengaluru
1329 331
Chennai
Fig 1: Traveling Salesman Problem (the Figure Shows the Distances

Between Seven Cities in India)
The salesperson can start from Bangalore and follow any sequence, such as
Chennai–Mumbai–Bhopal–New Delhi–Kolkata–Ranchi or Kolkata– Ranchi–
New Delhi–Mumbai–Bhopal–Chennai. If all the combinations of cities are

counted, there are 720 ways in which the sales associate can cover all the
cities after starting from Bangalore. Each of these is called a tour. For the
lowest cost tour, the salesman would have to calculate the distance covered
for each possible tour and take the shortest one.
If the salesman starts the tour from any other six cities, the problem increases
to 5040 possible tours! It is very difficult to compute the lowest cost for many
such tours. Hence, it is wise to rely on a decision support system that can do
the job efficiently.
The traveling salesman problem is a very well-known and well-researched
problem. When the number of cities increases to about 20, the possible tours
increase to more than 2 × 1018 tours which are about 2 million trillion tours!
Such many calculations become hard to complete, even for computers.
Control and planning

Supervisors, managers, and knowledge workers have to make more long-
term decisions and are far removed from the hour-to-hour and day-to-day
activities of the firm. Managers and supervisors need information for control
and planning. Control implies monitoring activities against given objectives
and taking action relevant to the situation. To exercise control, managers
need summary information showing how the organization's activities have
progressed and how close they are to the given objectives. For example,
managers in charge of marketing a product have to see:
1. How much have the sales been as compared to the targets?
2. Which regions have either exceeded or fallen behind the targets?
3. Which schemes for marketing are most successful?
4. How have the sales personnel fared against their targets?
5. What is the nature of comments from customers, etc.?
When this information is provided monthly or quarterly, managers can make
decisions that change the course of activities for the next time. They could,
for example, provide more personnel to a region that is slacking in sales,
increase incentive schemes in another place, launch advertising campaigns,
modify personnel budgets, etc., to achieve their targets. Controlling activities
is thus guided by the information available.
Planning is another activity that managers undertake. Planning involves

forecasting situations in the future and arranging for activities that will address
them. For example, for the marketing manager, planning may involve setting
up marketing incentive schemes to boost slack in sales or redeploy sales
personnel in a region, sending personnel to special training programs, and so
on. Planning thus involves envisaging a set of activities for the future.
Control and planning are intertwined decisions that managers often have to
make. For example, for a manager of the finance function, the job will involve
monitoring the organization's finances, including borrowing, lending, current
assets, and liabilities, and investing in stocks, bonds, futures, funds, etc. The
manager has to control all these accounts by changing allocations and
positions to align with the organization’s objectives of financial performance
and plan for the future based on the organization's current activities. So,
suppose the organization is growing in revenues, and there will likely be
accumulated surpluses. In that case, the finance manager must decide how
to invest the surplus in obtaining proper returns.
Strategic decisions
Another set of decisions made by top organization managers is termed
strategic decisions. These are long-term in scope and have a long-time
horizon of years. By nature, these decisions impact the very manner in which
the organization does its work. Strategic decisions are related to the vision
and mission of the organization – the decisions determine how the
organization will realize what it was created for originally and what it strives
to achieve eventually. Information systems such as executive information
systems are used for making strategic decisions. Some examples are as
follows:
1. Strategic decisions for a firm manufacturing pharmaceutical will revolve
around what markets to enter, what type of population segments to target,
and how to survive the competition. Information systems can provide data
and inputs on the organization's current operations, the market response of
various segments, and industry data on the competition. These can be used
with models that forecast pharmaceutical sales trends, show potential market
segment changes, highlight untapped and niche areas, and help predict
economic factors that will affect the organization.
2. For a government department, such as the revenue department of a state

in India, the strategic decisions will include reaching out to all revenue
segments in the population, providing government services efficiently, and
enhancing services that improve revenue intake. Information systems support
tools can be used to understand the demographics of the revenue population
and the most underserved segments and identify trends in revenue collection.
3. The Indian Railways uses information on ticket and freight transport sales
to decide which routes to enhance its services further and in which regions to
start train services. The strategic decisions involve long-term infrastructure
growth and planning for future demand for services.
Table 1 summarizes the three kinds of decisions that MIS supports.
Type of Employee Type of Decision Time Duration of

Decision
Executives Strategic Months, years; long

term
Workers, nurses, drivers Tactical Hours, immediate; short

term
Supervisors, managers, Operational Days, weeks, months;
knowledge workers medium term
Table 1: Kinds of Decisions, Their Time and Horizon, and the

Employees Who Make Such Decisions
4.3 Communication in Organizations

An important role of the information systems infrastructure in organizations
stems from their ability to facilitate communications. Communication can
occur through any form – data, voice, or video. Data communication is
associated with a wide variety of forms:
1. Data as short text messages.
2. Data as email messages.
3. Data as entire documents.
4. Data as structured files.
Communication networks form the core of the information technology
architecture of any modern organization. As organizations grow across
regions and countries, and partner with other organizations for their work,
their communication needs grow. Communication is critical for transactions,
decision-making, and strategic collaborations.
Types of communication
Organizational communication is the term used to describe how people
communicate within corporations, nonprofits, and other types of
organizations. According to studies, there is a direct correlation between job
happiness and performance and workplace communication level.
Many types of communication can be affected by digital networks in
organizations. These are described below.
1. Synchronous communication happens when two or more parties
communicate simultaneously. For example, a phone conversation between
two people or a chat session on the Internet between two people is an
example of synchronous communication. Both parties can send and receive
messages at the same time.
2. Asynchronous communication happens when two or more parties
communicate but not simultaneously. They may send messages to each
other, to which they may respond at a later point in time. For example, email
works in the asynchronous mode, where a person sends a message to
another person who responds to the message later. Chat messages, not
exchanged between persons during a chat session, come in the
asynchronous mode category. Figure 2 shows the difference between
synchronous and asynchronous communication.
3. Simplex communication happens when communication is possible only in
one direction. Radio receivers are simplex devices that can only receive
signals but cannot transmit any signals.
4. Half-duplex communication happens when two persons communicate with
each other but not at the same time. For example, radio transmitter-receivers
can only send or receive signals at any time.
5. Duplex communication happens when two persons can communicate with
each other while simultaneously sending and receiving signals. All phone
networks are duplexes.
Fig 2: (a) Synchronous and (b) Asynchronous Communication Modes

Examples of communications in organizations
Sales personnel traveling to meet their customers carry various
communication devices. Mobile phones allow them to send short messages
to potential visit sites and also allow them to call clients. Smart mobile phones
also allow them to connect to corporate systems such as a customer
relationship management system to see the client's status – whether the client
has responded to a query, has had any earlier transactions, etc. The
salesperson may also have a laptop computer on which he/she carries data
and programs that will allow him/her to connect to the organization’s central
servers and read and write data about the client. The connection could be
made using wireless network cards or locally available Internet facilities.
Many hospitals now provide hand-held computers to doctors, who, on their
visits to patients in various wards in the hospital, enter data about their visits
either by typing it in or by recording a voice message. Once in their office,
they can conveniently transmit the data to a desktop computer or a server
through wireless networks. Hand-held devices are also used to request
specific services such as equipment, medication, or nursing assistance.
Taxi service in Bangalore uses the Global Positioning System (GPS). This
service pinpoints the location of its taxis carrying GPS devices to identify
where any taxi in its fleet is. When any customer calls in for a service, it asks
the customer for his/her location and, from its system, finds the nearest
available taxi that can be sent to him/her. The GPS is located in taxis and
beams information about its location to the central server of the taxi service.
The taxi service also uses data from GPS information to assess the demand
for their taxis across the city.
The bus services also use GPS in Regensburg, Germany (as in many other
European cities). The GPS devices in the buses send information about the
location and speed of each bus to a central server, which then uses the
information to communicate to the commuters at various bus stops along the
route how much time will elapse before the next bus arrives. The commuters
waiting at bus stops can then use the information to either wait for the bus or
use alternate means of transport.
The BlackBerry service, developed by the Research in Motion (RIM)
Company of Canada, allows users to receive email messages on their mobile
phones. As the service owner receives an email message, say in his office
mailing address, the BlackBerry software 'pushes' the email message out to
the mobile phone. The person using the service receives the email instantly
and can also read it and reply to it using the phone. Many officers of private
firms use the RIM service to stay constantly in touch with their colleagues and
collaborators.
Decision-making with communication technology
Communication is at the heart of the functioning of most modern
organizations. Messages sent and received from devices to people, from
people to people, and from device to device are sent across various formats
and channels, some of which have just been described.
Decision-making is supported by communication networks which aid in data
and information collection and dissemination of decisions. Some examples of
decisions aided by communication networks are as follows:
1. A large automobile fuel retailer in the USA has thousands of stations. Since
fuel prices fluctuate quite often and there is strong competition from rival
retailers, price changes must be communicated quickly to all the retailers. The
fuel pricing is done at the firm's headquarters, which collects data on pricing
from across the country and determines prices for each region. Prices of fuel
at every station are sent out as messages at the end of each 24-h cycle on
the computer networks. The headquarters message out the new price
information at night so that retailers can change the price information on the
fuel pumps and the large hoardings that display the prices. Decision-making
here is tactical, as prices are changed by the headquarters but reflect the
competitive needs of the local fuel station. The information used to make the
decision is sent daily and accurately reflects the current situation.
2. A bank in Mumbai uses radio-frequency identification (RFID) tags to

identify customers who enter its offices. These RFID tags are placed on cards
given to customers who carry them in their wallets. As a customer enters the
bank, the RFID tag is identified, and information regarding the customer is
made available to the bank employees. Someone then approaches the
customer immediately, addresses them by name, and takes them aside to
help them. This service is only provided to special, high-value customers. The
message regarding the customer is of strategic value to the bank and helps it
improve its service quality and retain customers.
The communication requirements of employees within organizations have
grown immensely with the advent of electronic wired and wireless networks.
Along with this have emerged several technologies that meet these
communication needs. A typical employee of a modern corporation often has
multiple communication devices on him at any time, including a mobile phone
and a laptop computer with wireless or wired connectivity. Such high levels of
connectivity also lead to an overload of communication information.
Organizations are currently evolving means by which such overload is
minimized and only relevant and useful communications are presented to the
user.
4.4 Concept Map
Fig 3: Decision-Making
4.5 Summary
Let us recapitulate the important concepts discussed in this topic:
• Tactical decisions – Minute, low-level decisions taken by workers with
clear objectives.
• Decisions made by managers with a medium-term scope are often called
operational decisions.
• Decisions made by top managers of an organization that determines how

the organization will realize what it was created for originally and what it
strives to achieve eventually are called strategic decisions.
• Synchronous communication happens when two or more parties
communicate simultaneously.
• Asynchronous communication happens when two or more parties
communicate but not simultaneously; they may send messages to each
other, to which they may respond at a later time.
• Simplex communication happens when communication is possible only in
one direction.
• Half-duplex communication happens when two persons communicate
with each other but not at the same time.
• Duplex communication happens when two persons can communicate
with each other while sending and receiving signals at the same time.
4.6 Glossary
Let us have an overview of the important terms mentioned in the topic:
Tactical decisions: Decisions that have a short-term impact and are taken
by workers and operators.
Operational decisions: Decisions that have a medium-term impact and are
taken by managers and supervisors.
Control: Monitoring organizational activities to see whether they help achieve
given objectives.
Planning: Forecasting situations in the future and planning actions to achieve
certain goals.
Strategic decisions: Decisions taken by high-level executives that have a

long-term impact.
4.7 Case Study
Seven Hills Health City
Information flows are key to the functioning of any hospital. When patients
enter a hospital, they are first registered as an entity in the hospital system.
From then onward the information about the patient, the treatments given to
him/her, the doctors attending to him/her, the facilities provided to him/her,
the medicines given to him/her, and the food given to him/her, amongst other
things are recorded. When the patient is about to leave the hospital, this
information is used to prepare a bill and update records. The information is
maintained for the record, about treatments, medications, facilities, etc., and
also to enhance medical services and care. Digital monitors and sensors
collect patient information and relay it to appropriate persons or equipment,
which is used to decide on further action and care.
Much of this information in most hospitals in India is recorded on paper if it is
recorded at all. The most that many modern hospitals do is record the
essential details about the patient in central systems and maintain paper
records on the treatment given. Doctors, nurses, and staff have not been
provided with digital equipment, and some find them cumbersome even if they
have such tools, so paper records are the best mode of creating and storing
information.
The Seven Hills Health City Hospital of Mumbai has invested in an unusual
innovation –creating a paperless hospital. This is one of the first such
initiatives in India. This innovation has ensured that the entire process of
patient care, including all the workflows, is entirely completed digitally, as also
all records are maintained and updated electronically.
When a patient enters the Seven Hills Hospital, a medical officer first collects
details about the patient and creates a unique identity for the patient with a
Unique Health Identification Number (UHID). This number acts as a primary
key for the patient for the current and all subsequent visits, and all information
pertaining to the patient is recorded and accessed using this number. As the
patient assigned to a doctor is sent for testing to various departments or is
admitted to a section for treatment, all such activities are recorded on the
systems available within the hospital using the UHID. Even the medications
provided and the monitoring is done on the patient during the course of the
treatment are recorded by the system and made available to attending
physicians and nurses. Suppose a particular treatment of medication has to
be given. In that case, this is recorded by the doctor on the system, and it
automatically translates into an order to the pharmacy department, which has
the medication shipped to the patient’s room. The doctor can also view the
inventory status of medications, and if any is not available, the system
prompts him about alternatives.
The information captured and stored in the systems helps the hospital not
only with better and more efficient patient care but also helps with managing
the hospital. The availability and scheduling of rooms, surgical theatres,
doctors, and nurses can be done efficiently with the available information. The
inventory levels of required hospital equipment, consumables in particular, as
well as drugs, can be monitored and replenished as required. Billing can be
efficient as all treatments and services provided are recorded live and made
available at the time of creating the bill, usually when the patient leaves the
hospital.
Even the patient records maintained by doctors are now in digital form. As
doctors do not like typing their notes, they are provided with digital recorders
in which they can speak, and this is later converted to text. The doctor can
speak out details about the treatment, the patient responses and history,
consultation notes, and also read other notes left by other doctors. The
system transcribes the digitally recorded voice to text that is easily indexed
and accessible by the system.
The system has enabled strong efficiencies in hospital administration. Owing
to the automated nature of recording treatments, medication, services, etc.,
billing is more efficient, error-free, and reduces slippage. The hospital
estimates it saves Rs. 50,000 monthly owing to better capture of patient care
details. Also, owing to the increased information about facilities available and
doctors’ schedules, the amount of time required to treat a patient overall has
reduced from an average of 6 days to 4.5 days. The hospital is also saving
on paper and the processes required to save, copy, distribute, store, and
retrieve the paper, which amounts to about Rs. 300,000 per month.
This pioneering effort of Seven Hills Hospital has received national
recognition, and it received the ‘Best ICT-enabled Hospital of the Year award
at the eIndia Awards ceremony in December 2011. The CIO of Seven Hills,
Suresh Kumar, has developed a healthcare solution software package called

Seven Hills e-HealthCare Suite that it plans to market to other hospitals. This
represents a significant business proposition for Seven Hills as the need for
IT in hospitals is very high; the hospitals spend considerable amounts of
money on IT systems, and there are not many software solutions available in
the market that are tailored for them.
References and Suggested Reading

• Srikanth, R. P. (2012) SevenHills Health City signals new era in patient
care with paperless hospital. Information Week, 1(3): 54–55.
E-References
• http://www.business-standard.com/india/news/sevenhills-e-health-to-tie-
up30-hospitals-by-next-year/456174/ (viewed in April 2012).

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Segment 2

Topic 4 : Decision Making and Communication

4.2 Decision-Making with MIS

Fig 1: Traveling Salesman Problem (the Figure Shows the Distances

New Delhi–Mumbai–Bhopal–Chennai. If all the combinations of cities are

Control and planning

Planning is another activity that managers undertake. Planning involves

2. For a government department, such as the revenue department of a state

Type of Employee Type of Decision Time Duration of

Executives Strategic Months, years; long

Workers, nurses, drivers Tactical Hours, immediate; short

Table 1: Kinds of Decisions, Their Time and Horizon, and the

4.3 Communication in Organizations

Fig 2: (a) Synchronous and (b) Asynchronous Communication Modes

2. A bank in Mumbai uses radio-frequency identification (RFID) tags to

4.4 Concept Map

• Decisions made by top managers of an organization that determines how

Strategic decisions: Decisions taken by high-level executives that have a

Suresh Kumar, has developed a healthcare solution software package called

References and Suggested Reading

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