Decision Making

THE JOB OF A MANAGER

PREPARED BY MEHNAZ AKHTER

Meaning of Decision making
Decision making is the process of choosing a particular
course of action from among the alternatives available. It
involves judgment.
Decision making is a process of responding to a problem by
searching for and selecting a solution or course of action
that will create value for organizational members.
The objectives of decision making is to achieve an
organizational goals or to solve a problem.
Types of Problems

Structured problems
• Involved goals that clear.
• Are familiar(have occurred before)

• Easily and completely defined- information about the problem is available.

Unstructured Problems
• Problems that are new or unusual

• Goals are not clear.

• Information is ambiguous or incomplete.

Types of Decisions
There are basically two kinds of decision that
managers called upon to make:
 Programmed
 Non-programmed Decision
Programmed decision

•Programmed decision is a repetitive decision the

can be handled by a routine approach.
• They are relatively structured and information are
available and complete. Here a manager makes a
decision once and he uses that decision again and
again.
Non-programmed decisions
Non programmed decisions are used for non-
routine matters of an organization.
They are unique in nature and every situation
requires special attention.
Non- programmed decisions are those decisions
that are relatively unstructured and occurs much
less often than a programmed decisions.
 Programmed Versus Non-Programmed
Decision Making
Characteristics Programmed Non- Programmed Decision
decisions
Type of problem Structured Unstructured

Managerial level Lower Level Upper Level

Frequency Repetitive New, unusual

Information Readily available Ambiguous or incomplete

Time frame Short Relatively long

The Decision making process
Step 1: Identify the problem: Decision making
process starts with identification of the problem.
Problem is the differences between the actual and
desired situation.
Step 2: Develop alternative solutions: In this step
managers developed alternative solutions of the
problem.
The Decision making
process
They can develop alternative solution in the
following ways-
◦ Brain storming
◦ Talk to the staff members
◦ Talk to major customers
◦ Study hard
◦ Allow subordinates to participate in a decision
making process
The Decision making process
Step 3:Evaluate alternative solutions: Once
managers have developed a set of alternatives,
they must evaluate each one on the basis of three
questions-
Is this alternative feasible?
Is the alternative provide a satisfactory solution?
What are the possible consequences for the rest of
the organization?
The Decision making process
Step 4 :Make a choice: Making a choice is not a easy
task, it is the most complex task. It is one of the most
difficult part of the decision making process. Managers
can use following factors as a guideline in making a
decision-
◦ Concentrate on differences
◦ Identify must and should
◦ No compromise with must
◦ Relate resource requirement to resource available
◦ Consider time as a great factors
Characteristics of Effective decision
making
 It is logical and consistent.
 It requires only as much information and analysis
as is necessary to resolve a particular dilemma.
 It is straightforward,
 Reliable,
 Easy to use and understand
 Flexible.
Risk involved in decision making
Decision making is undoubtedly a risky job on the
part of a manager. But all decisions are not equally
risky. From the point of involvement of risk, decision
making may be of following types:
Decision making under conditions of certainty: In a
situation involving certainty, people are reasonably
sure about what will happen when they make
decision.
Here the risk of the manager is minimum.
A manager is making decisions under conditions of
certainty when the following conditions are fulfilled:
Risk involved in decision making
1. Information available to make a decision are
sufficient.
2. Outcome of a decision may be predicted with a fair
amount of certainty.
 Decision making under conditions of Risk:
In risk situation, a factual information may exist, but
it may be incomplete.
Here risk of the manager is moderate. A manager is
making decision under conditions of risk when the
following conditions are fulfilled:
1. Information available is not sufficient
2. Outcome of the decision may only be guessed
Risk involved in decision making
Decision making under Uncertainty: In a situation of
uncertainty, people have only information, but they
do not know whether or not the data are reliable and
they are very unsure about whether or not the
situation may change.
Here the risk of the manager is the highest. A
manager is mainly making decision under conditions
of uncertainty when the following conditions are
fulfilled:
1.Very little of no information are available
2.Outcome is unpredictable.