Decision Making Environment

Certainty. Risk. Uncertainty

PREPARED BY- ROLL NO.- SECTION - BCOM

BIPASHA BATRA 274 B HONS.
CONCEPT OF
DECISION MAKING
A decision can be defined as a course of action purposely
chosen from a set of alternatives to achieve organizational
or managerial objectives or goals. Decisions are made at
every level of management to ensure organizational or
business goals are achieved.

“Decision-making involves the selection of a course of

action from among two or more possible alternatives in
order to arrive at a solution for a given problem”.
Decision making process is a consultative affair done by a
comity of professionals to drive better functioning of any
organization. Thereby, it is a continuous and dynamic
activity that pervades all other activities pertaining to the
organization.
CHARACTERISTICS OF
DECISION-MAKING

1) Decision-making is a goal-
oriented process. Decisions are
made to achieve certain goals
i.e. to bridge the gap between the
present position and the desired
position.

2) Decision making involves choice or 3) Decision-making is an intellectual 4) Decision-making is situational. A

selection of the most appropriate process. Decisions are the outcome of manager may take one decision in a
course of action out of various deliberations, reasoning, judgement particular situation and opposite
alternatives and it is an ongoing/ and evaluation. It also involves decision in another situation. There
continuous process. intuition and experience may also be a decision not to act.
IMPORTANCE OF
DECISION-MAKING
In the words of George Terry:
“If there is one universal
Decision-making is perhaps the most important mark of a manager, it is
component of a manager’s activities decision-making.”

It plays the most important role in the planning

process. When the managers plan, they decide on
many matters as what goals their organisation will
pursue, what resources they will use, and who will
perform each required task. Decision-making is the heart
of planning. Decision-making
underlines the entire process
In organising process, the manager is to decide upon of management because
the structure, division of work, nature of responsibility every managerial function
and relationships, the procedure of establishing such involves decisions.
responsibility and relationship and so on.
DECISION-MAKING
ENVIRONMENT

The quality of the decisions made in an organization

will dictate the success or failure of the said business.
So all the available information and alternatives must
be studied before arriving at an important decision.
The process of decision making will help a great deal.
Another factor that affects these decisions is the
environment in which they are taken. There are a few
different types of environments in which these
decisions are made.
And the type of decision making environment has an
impact on the way the decision is taken. Broadly there
are three basic types of decision making environment.
Let us take a brief look at each of them.
 CERTAINTY
Certainty is an environment of
no or very low ambiguity. Under
these conditions, the manager
has complete, accurate and
measureable information
about the objectives, as well as
the outcomes of the alternative
decisions. Certainty is an ideal
situation where the manager
has perfect information. This
type of environment is rarely
found in managerial decision
making
RISK UNCERTAINTY
Risk is a condition of moderate
ambiguity. Managers usually
Future is neither predictable
take decisions in a risky
nor controllable. Uncertainty is
environment. Risk exists when
an integral element of future.
managers have some
Uncertainty is associated with
information regarding
a very dynamic external
outcomes of alternatives but do
not have the complete picture. environment and lack of
The quality of decisions in a availability of information.. The
risky environment depends on factors may be difficult to
the accuracy of the assigned identify or beyond the control
probabilities. To make good of manage
decisions managers must do
systematic research
 TYPES OF MANAGERIAL DECISIONS

Programmed Decisions
Programmed decisions are concerned with relatively routine and
repetitive problems or issues. Therefore, a specific sequence of steps
can be laid down in advance so that the decisions become highly
structured. They are programmed because information on them is
already available and can be processed in a pre-planned manner

Non-Programmed Decisions
Administrative decisions are directed towards developing
divisional plans, structuring workflows, distribution channels,
developing material sources, acquisition of facilities,
personnel training and so on. They are primarily top
management oriented. These are unstructured decisions and
are non routine in nature.
 TYPES OF MANAGERIAL DECISIONS

Individual Decision Making

Individual decision making is the process where
the individual makes the decisions. Both routine
and strategic decisions can be made by
individuals.

Group Decision Making

When two or more managers at the same or at different
levels of authority jointly deliberate on the problem,
identify and evaluate the alternatives and arrive at a
decision, it is called group decision-making.
 TYPES OF MANAGERIAL DECISIONS

Administrative decisions Strategic decisions

Administrative decisions are directed towards
developing divisional plans, structuring
workflows, distribution channels, developing
material sources, acquisition of facilities,
personnel training and so on. They are primarily
middle management oriented.
Strategic or basic policy decisions involve
long-term commitments and exert enduring
influence on the organization's future.
Therefore, responsibility for such decisions lies
mainly with the top management.

Operating decisions
These are concerned with routine and repetitive
problems. They involve short-term commitment and
exercise a minor influence on the future of the
organization. They are concerned with maximizing the
performance of current operations. They do not require
much managerial judgement or evaluations
Thank You