Decision Making

Pankaj Kr. Srivastava

Organisational Decision making
• “ the process of responding to a problem by searching for and selecting a solution or course of action that will create value for organisational stakeholders”. • There are basically two kinds of decision that need to make: 1. Programmed 2. Non Programmed

Types of Problems and Decisions
• Structured problems
1.Involved goals that clear. 2.Are familiar(have occurred before) 3.Are easily and completely defined- information about the problem is available and complete.

Programmed decision
1.A repetitive decision the can be handled by a routine approach.

Types of Problems and Decisions
• Unstructured problems * Problems that are new or unusual and for which information is ambiguous or incomplete. * Problems that will require custom-made solutions. • Non-programmed decisions * Decision that are unique and nonrecurring. * Decision that generate unique responses.

Types of Programmed Decisions
• Policy • Procedure • Rule

The Decision-Making Process
Implement the chosen Alternative

Define the Problem

Evaluate Alternatives

Gather facts and develop alternatives.

Select the best alternative.

Follow up and evaluate the chosen alternative.

The Decision-Making Process
• Identify a problem and decision criteria and allocating weights to the criteria. • Developing, analyzing, and selecting an alternative that can resolve the problem. • Implement the selected alternative. • Evaluating the decision’s effectiveness.

Steps of Decision Making

Step 1: Identifying the Problem
• Problem A discrepancy between an existing and desired state of affairs. • Characteristics of Problems A problem becomes a problem when a manager becomes aware of it. There is a pressure to solve the problem. The manager must have the authority, information, or resources needed to solve the problem.

Step 2: Identify the Decision Criteria
• Decision criteria are factors that are important ( relevant) to resolving the problem. * Costs that will be incurred (investment required). * Risks likely to be encountered ( chance of failure). * Outcomes that are desired ( growth of the firm).

Step 3: Allocating Weights to the Criteria • Decision criteria are not of equal importance: * Assigning a weight to each item. * Places the items in the correct priority order of their importance in the decision making process.

Step 4: Developing Alternatives
• Identifying viable alternatives. * Alternatives are listed ( without evaluation) that can resolve the problem.

Step 5 :Analyzing alternatives
• Appraising each alternative’s strengths and weaknesses * An alternative’s appraisal is based on its ability to resolve the issues identified in step 2 and step 3.

Step 6: selecting the alternative
• Choosing the best alternative * The alternative with the highest total weight is chosen.

Step 7: Implementing the Alternative
• Putting the decision to and gaining comment from those whose will carry out the decision.

Step 8: Evaluating the decision’s effectiveness
• The soundness of the decision is judged by its outcomes. * How effectively was the problem resolved by outcomes resulting from the chosen alternatives? * if the problem was not resolve, what went wrong?

The decision making process Example
Identification of a problem

“My sales Reps need new computers!” Memory and Storage, Display Quality, Better Life,Warranty, Carrying weight Memory and Storage-10, Display Quality -8, Better Life -6,Warranty -4, Carrying weight-3 Toshiba, HP, Soni Vaio, Qosmio, Gateway, Apple iBook, Lenovo, Dell Toshiba, HP, Soni Vaio, Qosmio, Gateway, Apple iBook, Lenovo, Dell Toshiba, HP, Soni Vaio, Qosmio, Gateway, Apple iBook, Lenovo, Dell “ Toshiba!”

Identification of Decision Criteria

Allocation of weights to criteria

Development of alternatives

Analyzing of alternatives

Selection of alternatives

Implementation of alternatives

Evaluation of decision alternatives

Techniques for improving decision making
Brainstorming – idea generation for decision making. Nominal group technique (NGT)- problem outlined, presentation of solution in written form, discussion over written solutions, and final decision. Delphi technique- decision made on the basis of questionnaire filled by the respondents. Consensus mapping- decision made on the basis of the report presented by the representative of each group after

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