Decision making

Dr Digvijay Sharma
School of Health Sciences
Decision making
decision-making is all about choosing from the
available options. The better choices you make, the
better decision-maker you'll become. You have many
decision-making examples in daily life such as:
Deciding what to wear. Deciding what to eat for lunch.
Definition
Decision-making can be defined as the process of
selecting a right and effective course of action from
two or more alternatives for the purpose of achieving a
desired result.
Decision-making is the essence of management.
A decision is an act of selection or choice of one action
from several alternatives.
Definition
According to P. F. Drucker – “What­ever a manager
does he does through making decisions.” All
matters relating to planning, organising, direction, co-
ordination and control are settled by the managers
through decisions which are executed into practice by
the operators of the enterprise.
George Terry defines decision-making “as the
selection of one behaviour alternative from two or
more possible alternatives.”
Process of decision making
Using a step-by-step decision-making process can
help you make more deliberate, thoughtful decisions
by organizing relevant information and defining
alternatives. This approach increases the chances that
you will choose the most satisfying alternative
possible.
Principles of Decision Making
If certain principles are followed for
decision-making, such multidimensional
reactions can mostly be overcome.
Step 1: Identify the decision
You realize that you need to make a decision. Try to
clearly define the nature of the decision you must
make. This first step is very important.
Step 2: Gather relevant information

Collect some pertinent information before you make

your decision: what information is needed, the best
sources of information, and how to get it. This step
involves both internal and external “work.” Some
information is internal: you’ll seek it through a process
of self-assessment. Other information is external:
you’ll find it online, in books, from other people, and
from other sources.
Step 3: Identify the alternatives

As you collect information, you will probably identify

several possible paths of action, or alternatives. You
can also use your imagination and additional
information to construct new alternatives. In this step,
you will list all possible and desirable alternatives.
Step 4: Weigh the evidence

Draw on your information and emotions to imagine

what it would be like if you carried out each of the
alternatives to the end. Evaluate whether the need
identified in Step 1 would be met or resolved through
the use of each alternative. As you go through this
difficult internal process, you’ll begin to favor certain
alternatives: those that seem to have a higher potential
for reaching your goal. Finally, place the alternatives in
a priority order, based upon your own value system.
Step 5: Choose among alternatives

Once you have weighed all the evidence, you are ready
to select the alternative that seems to be best one for
you. You may even choose a combination of
alternatives. Your choice in Step 5 may very likely be
the same or similar to the alternative you placed at the
top of your list at the end of Step 4.
Step 6: Take action

You’re now ready to take some positive action by

beginning to implement the alternative you chose in
Step 5.
Step 7: Review your decision & its
consequences

In this final step, consider the results of your decision

and evaluate whether or not it has resolved the need
you identified in Step 1. If the decision has not met the
identified need, you may want to repeat certain steps
of the process to make a new decision. For example,
you might want to gather more detailed or somewhat
different information or explore additional
alternatives.
Types of Decision making
There are three types of decision in business:
strategic.
tactical.
operational.
Strategic decision making
A strategic plan supports the organization's vision and
mission statements by outlining the high-level plan to
achieve both. Strategic plans generally provide the
broad, long-term picture. In order to develop strategic
plans, top management uses reports on finances,
operations and the external environment to project
future actions. Strategic plans influence the
development of tactical plans.
Strategic decision making
Strategic decisions are long-term decisions.
These are considered where The future planning is
concerned.
Strategic decisions are taken in Accordance with
organizational mission and vision.
These are related to overall Counter planning of all
Organization.
These deal with organizational Growth.
Tactical Decision making
A tactical plan answers "how do we achieve our
strategic plan?" It outlines actions to achieve short-
term goals, generally within a year or less. They are
much narrower in focus and can be broken down into
the departmental or unit level. Tactical plans outline
what each department needs to achieve, how it must
do so and who has the responsibility for
implementation.
These are short-term based Decisions.
These are taken according to strategic and operational
Decisions.
These are related to working of employees in an
Organization.
These are in welfare of employees working in an
organization.
Operational decisions
Operational decisions are short-term decisions that
are made generally weekly, daily, or hourly, focusing
mainly on the details of operations, day-to-day
resource allocation, details of inventory control, and
delivery routing, to ensure the efficiency of operations
and an optimized flow of products along the biomass-
based production chains. Operational decisions can be
revised and adjusted frequently, due to the dynamic
structure of internal and external conditions of supply
chains and associated activities.
Operational Decisions
Operational decisions are not frequently taken.
These are medium-period based decisions.
These are taken in accordance with strategic and
administrative decision.
These are related to production.
These are related to production and factory growth.
Importance of Descision
making
Importance
1. Better Utilisation of Resources

Decision making helps to utilise the available

resources for achieving the objectives of the
organisation. The available resources are the 6 Ms, i.e.
Men, Money, Materials, Machines, Methods and
Markets. The manager has to make correct decisions
for all the 6 Ms. This will result in better utilisation of
these resources.
2. Facing Problems and Challanges


Decision making helps the organisation to face and
tackle new problems and challenges. Quick and
correct decisions help to solve problems and to accept
new challenges.
3. Business Growth


Quick and correct decision making results in better
utilisation of the resources. It helps the organisation to
face new problems and challenges. It also helps to
achieve its objectives. All this results in quick business
growth. However, wrong, slow or no decisions can
result in losses and industrial sickness.
4. Achieving Objectives


Rational decisions help the organisation to achieve all
its objectives quickly. This is because rational
decisions are made after analysing and evaluating all
the alternatives.
5. Increases Efficiency


Rational decisions help to increase efficiency.
Efficiency is the relation between returns and cost. If
the returns are high and the cost is low, then there is
efficiency and vice versa. Rational decisions result in
higher returns at low cost.
6. Facilitate Innovation


Rational decisions facilitate innovation. This is
because it helps to develop new ideas, new products,
new process, etc. This results in innovation.
Innovation gives a competitive advantage to the
organisation.
7. Motivates Employees


Rational decision results in motivation for the
employees. This is because the employees are
motivated to implement rational decisions. When the
rational decisions are implemented the organisation
makes high profits. Therefore, it can give financial and
non-financial benefits to the employees.
Bibliography
 https://www.umassd.edu/fycm/decision-making/process/
 Priyali Sharma. Decision-Making : Definition, Importance and
Principles | Management
 https://www.managementstudyguide.com/strategic-decisions.htm
 Gaurav Akran.https://kalyan-city.blogspot.com/2011/08/importance-
of-decision-making-in.html
Thank you