PROBLEM SOLVING/DECISION MAKING CYCLE

REVISION
CHAPTER-2

THE CONTENT & CONTEXT
OF MANAGEMENT DECISION
TYPES OF MANAGEMENT DECISIONS
(THREE DIMENSIONS TO DIFFERENTIATE DECISIONS)
Strategic or Operational

Unstructured or Structured

Dependent or Independent




Strategic or Operational

Operational in nature
Routine
Repetitive
Consequences
immediate or relatively
predictable
Decision body: middle
& lower managers
Strategic in nature
Significant for
organization
Long term effects
Usually one-offs
High degree of
risks/uncertainty



Unstructured or Structured


Ill understood
Fuzzy
Difficult to tackle
No clarity
Options: not
immediate or apparent
May have various
views/difficult to reach
consensus



Well defined
Distinct
Unambiguous
Options btw which
choice has to be made
are clear
Well understood &
agreed procedure is
followed to reach a
choice (programmable)

Dependent or Independent

Can be measured by two scales:
1. A scale representing influence of past &
possible future decisions

2. A scale representing the degree of
influence across other areas of the
organization
Affect of the type of decision on its elements



OPERATIONAL
STRUCTURED &
INDEPENDENT
DECISION
DECISION
BODY
OPTIONS UNCONTROLAAB
LE FACTORS
CONSEQUENCES
Possible to
have a
single
person
decision
body with
complete
autonomy
since
decision is
limited,
well
understood
& unlikely
to affect
other
decisions.
Likely to
have
reasonably
apparent
options but
there could
be many of
them.
Likely to be
few
uncontrollable
factors
because of
the bounded
nature of the
decision-
likely to be
well
documented.
Could be
several
attributes of
each
consequence
but likely to be
fairly
forecastable.
Affect of the type of decision on its elements





STRATEGIC
UNSTRUCTURED
&
DEPENDENT
DECISION
DECISION
BODY
OPTIONS UNCONTROLLABLE
FACTORS
CONSEQUENCES
Likely to
need a
multi-person
body since
decision is
important
for whole
organization
, prone to
different
interpretatio
n & wide
reaching in
effects.
Alternative
options
unlikely to
be
immediate
ly
apparent
but may
not be
numerous,
either
because
options
are
difficult to
generate
or are the
result of
compromis
es.
Likely to be
many
uncontrollable
factors, some of
which may not
even be known
& most of which
will be difficult
to forecast.
Likely to be
several
attributes of
each
consequence
all of which
could be
difficult to
forecast.
DECISION
ENVIRONMENT
Core & Boundary Decisions

Functional Area & Boundary Decisions

TWO CATEGORIES OF THE DECISION
ENVIRONMENT:
SPECIFIC ENVIRONMENT
GENERAL ENVIRONMENT

SPECIFIC ENVIRONMENT
In the total environment picture
those elements with which the
organization relates directly and on
more or less regular basis: these
elements can be called the specific
environment
General Environment
Technical
Legal
Political
Economic
Demographic
Ecological
Cultural

Complexity, Change &
Perceived Uncertainty
Two aspects of an organization's decision environment
which affect the context of a decision are :
a. Whether the environment is simple
or complex
b. Whether the environment is static
or dynamic

PRECEIVED UNCERTAINTY AS A
FUNCTION OF THE ENVIORMENT
Static
Environment
Where the factors
within the environment
do not change
Dynamic
Environment
Where the factors
within the environment
are continually
changing
Simple
Environment
Where there are a small
number of relevant factors
all of which are similar
Perceived uncertainty low Perceived uncertainty
moderately high

Complex
Environment
Where there are a large
number of relevant factors
which are mutually
dissimilar
Perceived uncertainty
moderately low

Perceived uncertainty high

OTHER FACTORS:
The extent of information available
The Time Available
The Decision Stimulus
DECISION OCCURS EXTERNAL
BECAUSE OF STIMULUS
MANAGERIAL WILL FORCES A
ALONE DECISION



OPPORTUNITY PROBLEM CRISIS
DECISIONS DECISIONS DECISIONS
APPROACH TO DECISION MAKING
Boundary Discretion
Treatment Discretion