DECISION

MAKING ,
PRESENTED BY:
HUMA ANSARI.
KRITIKA RAI.
KUSHWAHA KANT.
LAKSH MAHESHWARI
LALIT DAMOR.
SONIA ISRANI.
 “ the process of responding to a problem
by searching for and selecting a solution
or course of action that will create value
for organisational stakeholders”.
 Certainty
* A situation in which a manager can make
an accurate decision because the
outcome of every alternative choice is
known.
 Risk
* A situation in which the manager is able
to estimate the likelihood (probability) of
outcomes that result from the choice of
particular alternatives.
 THE RATIONAL DECISION MAKING PROCESS.

ASSUMPTIONS OF THE MODEL.

1. PROBLEM CLARITY.
2. KNOWN OPTIONS.
3. CLEAR PREFERENCES.
4. CONSTANT PREFERENCES.
5. NO TIME / COST CONSTRAINTS.
6. MAXIMUM PAYOFF.
 COMMON BIASES AND ERRORS.
 BOUNDED RATIONALITY.
 INTUTION.
 INDIVIDUAL DIFFERENCES.
 ORGANISATIONAL CONSTRAINTS.
 CULTURE DIFFERENCE.
 OVER CONFIDENCE BIAS.
 ANCHORING BIAS.
 CONFIRMATION BIAS.
 AVAILABILITY BIAS.
 REPRESENTATIVE BIAS.
 ESCALATION OF COMMITMENT ERROR.
 RANDOMNESS ERROR.
 HINDSIGHT BIAS.
Individuals make decisions by constructing
simplified models that extracts the essential
features from problems without capturing all
their complexity.
 Intuitive decision making
* Making decisions on the basis of
experience, feelings, and accumulated
judgment.
 DECISION STYLES .
 GENDER.
 PERFORMANCE EVALUATION.
 REWARD SYSTEM.
 FORMAL REGULATION.
 SYSTEM IMPOSED TIME CONSTRAINTS.
 HISTORICAL PRECEDENTS.
The rational model makes no acknowledgment
of cultural differences.
 The Decision-
Making Process

Implement
Define the Evaluate
the chosen
Problem Alternatives
Alternative

Gather facts and Select the best Follow up and

develop alternative. evaluate the chosen
alternatives. alternative.
 Identify a problem and decision criteria and
allocating weights to the criteria.
 Developing, analyzing, and selecting an
alternative that can resolve the problem.
 Implemented and selected alternatives.
 Evaluating the decision’s effectiveness.
 Problem
* A discrepancy between an existing and
desired state of affairs.
 Characteristics of Problems
* A problem becomes a problem when a
manager becomes aware of it.
* there is a pressure to solve the problem.
* the manager must have the authority,
information, or resources needed to solve
the problem.
 Decision criteria are factors that are
relevant to resolving the problem.
* Costs that will be incurred (investment
required).
* Risks likely to be encountered ( chance of
failure).
* Outcomes that are desired ( growth of the
firm).
 Decision criteria are not of equal
importance:
* Assigning a weight to each item.
* Places the items in the correct priority
order of their importance in the decision
making process.
 Decision criteria are not of equal
importance:
* Assigning a weight to each item.
* Places the items in the correct priority
order of their importance in the decision
making process.
 Identifying viable alternatives.
* Alternatives are listed ( without evaluation)
that can resolve the problem.
Step 5 :Analyzing alternatives
 Appraising each alternative’s strengths and
weaknesses
* An alternative’s appraisal is based on its
ability to resolve the issues identified in step
2 and step 3.
 Choosing the best alternative
* The alternative with the highest total weight is
chosen.
Step 7: Implementing the
Alternative
 Putting the decision to and gaining comment
from those whose will carry out the decision.
 The soundness of the decision is judged by its
outcomes.
* How effectively was the problem resolved by
outcomes resulting from the chosen
alternatives?
* if the problem was not resolve, what went
wrong?
 It focuses on what is important
 It is logical and consistent.
 It acknowledges both subjective and
objective thinking and blends analytical with
intuitive thinking.
 It requires only as much information and
analysis as is necessary to resolve a
particular dilemma.
 It encourages and guides the gathering of
relevant information and informed opinion.
 It is straightforward,reliable, easy to use,
and flexible.
 Brainstorming – idea generation for decision making.
 Nominal group technique (NGT)- problem outlined,
presentation of solution in written form, discussion over
written solutions, and final decision.
 Delphi technique- decision made on the basis of
questionnaire filled by the respondents.
 Consensus mapping- decision made on the basis of the
report presented by the representative of each group after
 Group versus individual.
A general belief that group decisions are
better than individual decisions.
 Generates more complete information and
knowledge.
 Offer increased diversity of views.
 Generates higher quality decisions.
 Increased acceptence of a solution.
 Time consuming
 There are conformity pressures in groups.
 Decisions can be dominated by one or a few
members.
 Ambiguous responsibility.
Groupthink
Phenomenon in which the norm for
consensus overrides the realistic appraisal
of alternative courses of action.
Groupshift
 A change in decision risk between the
group’s decision and the individual
decision that members within the group
would make; can be either toward
conservatism or greater risk.
A GROUP has two or more individuals,interacting and
interdependent,who have come together to achieve
particular objectives team is also a group but there
are differences between both.
• A group interacts primarily to share information and
to make decisions to help each member perform
within his or her area.
• No need to engage in collective work .
• Performance is merely the summation of each group
member’s individual contribution.
Whereas
• In a TEAM coordinated efforts are needed.
• Individual efforts results in a performance that is
greater than the sum of the individual inputs.
 Groups Teams

Share Collective
Goal performance
information
Neutral Synergy Positive
Individual Accounta Individual and
bility mutual
Random and
varied Skills Complementary
 Team effectiveness can be measured on the
basis of team’s productivity, manager’s
ratings of the team’s performance, and
aggregate measures of member satisfaction.
Context
•Adequate resources
•Leadership and structure
•Climate of trust
•Performance evoluation and
reward systems
Composition
•Abilities of members
•Personality
•Allocating roles
•Diversity
•Size of teams Team effectiveness
•Member flexibility
•Member preferences

Work design
•Autonomy
•Skill variety
•Task identity
•Task significance
Process
•Common purpose
•Specific goals
•Team efficacy
•Conflict levels
•Social loafing