DECISION MAKING

WHAT IS DECISION?
 Decision is the choices made from
among two or more alternatives.
 All individuals in the organaisation
makes decisions.
MEANING OF DECISION MAKING
 Decision making means analysing
different alternatives and arriving at
decision in the face of a particular
situation about what to do and what
not do.
 In other words, it means reaching a
conclusion or final decision which can
be implemented as a solution of a
problem.
DEFINITION

 “Decision making is the actual selection from

among alternatives of a course of action .”

By: Koontz and O’Donnel

 “Decision making is the work which a manager

performs to arrive at conclusion and
judgement.”

By: Louis A. Allen

HOW SHOULD DECISIONS BE
MADE?
 Decision are made with the help of
“Rational Decision making process”.

 Rational: It refers to choices that are

consistent and value maximizing.
STEPS IN RATIONAL DECISION
MAKING MODEL

 Define The Problem.

 Identify The Decision Criteria.
 Allocate Weights To The Criteria.
 Develop The Alternatives.
 Evaluate the Alternatives.
 Select the best Alternative.
ASSUMPTIONS OF THE MODEL

 Problem Clarity
 Known Options
 Clear Preferences
 Constant Preferences
 No Time Or Cost Constraints
 Maximum Pay off
 INDIVIDUAL DECISION
MAKING

DECISION MAKING IS THE PROCESS

OF CHOOSING FROM AMONG
SEVERAL ALTERNATIVES.
TYPES OF DECISIONS

PROG DECISIONS NONPROG DEC

TYPE WELL STRUCTURED POORLY ST

FREQUENCY REPETITIVE, ROUTINENEW, UNUSUAL

GOALS CLEAR, SPECIFIC VAGUE

INFO READILY AVA NOT AVAILABLE

CONSEQUENC MINOR MAJOR

ORG LEVEL LOWER UPPER

TIME SHORT LONG

BASIS OF SOL SET PROCEDURE JUDGEMENT

THE DECISION MAKING
PROCESS

 RATIONAL APPROACH
 STATE THE SITUATIONAL GOAL
 IDENTIFY THE PROBLEM
 DETERMINING THE DECISION TYPE
 GENERATE ALTERNATIVES
 EVALUATE ALTERNATIVES
 CHOOSE AN ALTERNATIVE
 IMPLEMENT THE PLAN
 CONTROL
THE DECISION MAKING
PROCESS
 THE BEHAVIOURAL APPROACH
 BOUNDED RATIONALITY
 SUBOPTIMISING
 SATISFICING
 THE PRACTICAL APPROACH
 THE PERSONAL APPROACH
HOW ARE DECISIONS
ACTUALLY MADE

 BOUNDED RATIONALITY
 INTUITION
 WAY OF IDENTIFYING PROBLEMS
 EFFORT IN ALTERNATIVE DEVELOPMENT
 MAKING CHOICES - AVAILABILITY
HEURISTIC
 REPRESENTATIVE HEURISTIC
 ESCALATION OF COMMITMENT
 INDIVIDUAL DIFFERNCES
 ORGANISATIONAL CONSTRAINTS
 CULTURAL DIFFERNCES