Management

• Decision Making

Antony Andrew,
Senior Lecturer in Management
 Introduction

Every aspect of management functions, such as

planning, organizations, direction and control is

determined by decisions, the result of which is the

performance in the organization.

In planning, the manager has to decide many things

such as what to produce, what to sell, where, when,

how, and so on.

In an organization, decision-making relates to the structure,

nature of organization, division of work, etc.

In direction, decisions relate to determining the course of

action, deciding the type of motivation, deciding the orders

and instructions to be given, and so on.

In control, the decisions relate to determining of standards,

control points, procedures, etc

Decision making is the act of choosing one alternative from
among a set of alternatives.

Types of decision
1. Programmed decision
2. Non-programmed decision

Programmed decision
Programmed decision is one that is fairly structured and/or
recurs with some frequency. Programmed decisions do not
necessarily remain confined to simple issues, such as
vacation policies or similar such things; they are also used
to deal with very complex issues, such as the types of tests
that a doctor needs to conduct before performing major
surgery on a patient with diabetes.
1. programmed decisions, these are decisions that
occur frequently enough that we develop an
automated response to them.

Automated response we use to make these decisions.

• 2. However, decisions that are unique and important

require conscious thinking, information gathering, and
careful consideration of alternatives are called Non-
programmed decisions.
• Non-programmed decisions are relatively unstructured
and may occur much less often.
 Decision making can also be classified into three
categories based on the level at which they occur.
• Strategic decisions: Strategic decisions are major choices of
actions and influence whole or a major part of business
enterprise. They contribute directly to the achievement of
common goals of the enterprise. They have long-term
implications on the business en­terprise. These decisions are
based on partial knowledge of the environmen­tal factors which
are uncertain and dynamic. Such decisions are taken at the
higher level of management.
• Tactical decisions: These decisions relate to the implementation
of strategic decisions. They are directed towards developing divi­
sional plans, structuring workflows, establishing distribution
chan­nels, acquisition of resources such as men, materials and
money. These decisions are taken at the middle level of
management.
• Operational decisions: These decisions relate to day-to-day op­
erations of the enterprise. They have a short-term horizon as
they are taken repetitively. These decisions are based on facts
regarding the events and do not require much of business judge­
ment. Operational decisions are taken at lower levels of man­
agement.
 Decision making can also be classified into three
categories based on the level at which they occur.
Different decision-making models designed to
evaluate the effectiveness of non-programmed
decisions are;

1. The rational decision-making model,

2. Moving to the bounded rationality decision-
making model,
3. The intuitive decision-making model, and
4. creative decision-making model.
 The rational decision-making model
The rational decision-making model describes a
series of steps that decision makers should
consider if their goal is to maximize the quality
of their outcomes.
Steps in the rational Decision Making Model
 2. The Bounded rationality model
The bounded rationality model of decision
making recognizes the limitations of our
decision-making processes.
According to this model, individuals knowingly
limit their options to a manageable set and
choose the best alternative without conducting
an exhaustive search for alternatives.
An important part of the bounded rationality
approach is the tendency to satisfice, which
refers to accepting the first alternative that
meets your minimum criteria.
 3. The intuitive decision-making model.
The intuitive decision-making model has emerged as an
important decision making model. It refers to arriving
at decisions without conscious reasoning. When
talking about intuition we are describing something
that is known, perceived, understood or believed by
instinct, feelings or nature without actual evidence,
rather than by use of conscious thought, reason, or
rational processes.
This does not imply that intuitive decision making is
irrational. Instead, we mean that the explanation for a
choice is not directly available through conscious or
logical thought.
 Intuitive decision-making ability is also known as 'sixth sense'
and involves being able to gather information that other
individuals may miss. It is the opposite of rational decision
making, which is when individuals use analytics, facts, and
a step-by-step process to come to a decision.
• The model argues that in a given situation, experts making
decisions scan the environment for cues to recognize patterns.

4. Making Creative Decisions

• Creativity is the generation of new, imaginative ideas.
• To open decision makers up to new alternatives or guide decision-
making when alternatives are not easily imagined, it pays to think
outside the box. For example, in deciding on a new process, nothing is
waiting on a shelf, the process must be constructed. For creative
decision analysis, take a few extra steps to come up with more and/or
better alternatives.