Session 03

Managerial Decision Making

MC9010 – Management & Case Studies

Ms. Jasintha Nirojan
Faculty of Management studies & Commerce
Department of Human Resource Management
University of Jaffna
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 Management and decision making
?

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 A way of defining Management
Diagnose
Management can be considered as a
Decide
process of successful decision-making
Do and problem-solving aimed at
enhancing performance.

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 Process of Management

Planning
Efficiently

Decision-Making

Controlling Organizing
Problem-Solving

Effectively
Leading

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Decision-Making &
Problem-Solving
Core Function of Management
 Managerial Decision Making
Decision making is not easy. It must be done in
the middle of
• ever-changing factors
• unclear information
• conflicting points of view

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 How Do You Make Decisions?
• People make decisions everyday without
realizing their diverse decision-making styles
• Managers are referred to as decision makers
• Organizations grow and prosper based on
decisions made by managers
• Good decision making is a vital part of good
management

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Why we make decisions?

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 Manager is a Problem-Solver
Managers at all levels (Top, Middle,
Bottom) and all areas (Marketing,
Operations, HRM, Finance, IT/IS, R&D)
have to make correct decisions and
successfully solve problems as an inherent
part of their job role.

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 Understanding related terms
• Problem
• Problem solving
• Decision
• Decision making

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 Problem
The unfavorable difference between the actual
state of affairs and desired/expected state of
affairs

Actual Desired
State of Affairs State of Affairs

Ex. Decreasing trend in sales, Frequent breakdowns in

machinery, Increasing customer complaints.
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 Types of Problems

Technical Human
Problems Problems

Simple Complex
Grievance Complain Conflicts Clash Crisis

Cardinal Rule : Must solve the problems at the most earliest stage.
 Problem-Solving
Is the process of identifying & implementing
best solutions to problems by correctly
diagnosing the route cause/s with right
decisions.

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 Decision

• Choice or Selection
• Selection of the best alternative solution for
a problem
• Decision is a solution for a problem
• Choices made from among alternatives
developed from data perceived as relevant.
(Robbins 2012)

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 Decision Making
The act of choosing one alternative among a
set of solutions (Griffin 2012).

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 Types of Decisions

• Programmed Decisions
• Non-programmed Decisions

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 Types of Decisions
Programmed Decisions
A decision that is fairly structured solution to routine
problems determined by rules, procedures and habits.

Non-programmed Decisions
Specific solutions created through unstructured process
to deal with non- routine problems.

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 Decision Characteristics
Programmed Non-
programmed
Situation Routine & Repetitive Non-routine &
Novel
Nature Structured unstructured

Degree of Familiar Unfamiliar

knowledge
Made by Mostly Lower level Mostly Top level
managers managers

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Decision Types & Managerial Levels

Non-Programmed
Top Decisions

Middle

Programmed
Lower Decisions

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 Decision Making Conditions

• Certainty
• Risk
• Uncertainty
• Ambiguity

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 Decision Making Conditions
Certainty
All of the information the decision maker needs is fully available.
Risk
A decision has clear goals and good information is available, but
the future outcomes associated with each alternative are subject
to change.
Uncertainty
Managers know which goals they wish to achieve, but information
about alternatives and future events is incomplete and managers
may have to come up with creative approaches to alternatives.
Ambiguity and Conflict:
The goals and/or problem are unclear and difficult to define

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Decision Making Conditions and Decisions
Organisational
Problems

Low Possibility of Failure

Certainty Uncertainty High
Risk

Programmed Non-programmed
Decisions Decisions

Solutions for the

problems

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Decision Making Process

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 Decision-making steps
Recognition of decision requirement
Diagnosis and Analysis of causes
Development of alternatives
Selection of the desired alternative
Implementation of the chosen alternative
Evaluation and Feedback
 Decision Making Styles
• Individual Decision Making
(Made by a single person, Obvious
in autocratic and centralized
environments )
• Group (Collective) Decision Making
(Made by a group/team, Obvious in
democratic and de-centralized
environments )
 Personal Decision Styles
Differences among people with respect to how they
perceive problems and make decisions.

Different decision making styles:

 Directive style
 Analytical style
 Conceptual style
 Behavioural style

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 Personal Decision Styles
Directive Style
 People who prefer simple, clear-cut solutions to problems
 Make decisions quickly
 May consider only one or two alternatives
 Efficient and rational
 Prefer rules or procedures

Analytical Style
 Complex solutions based on as much data as they can gather
 Carefully consider alternatives
 Base decision on objective, rational data from management
control systems and other sources
 Search for best possible decision based on information available

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 Personal Decision Styles
Conceptual Style
 Consider a broad amount of information
 More socially oriented than analytical style
 Like to talk to others about the problem and possible solutions
 Consider many broad alternatives
 Relay on information from people and systems
 Solve problems creatively

Behavioural Style
 Have a deep concern for others as individuals
 Like to talk to people one-on-one
 Understand their feelings about the problem and the effect of a given decision
upon them
 Concerned with the personal development of others
 May make decisions to help others achieve their goals
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 Group Decision Making
Group decision making (also known as collaborative
decision making) is a situation faced when individuals
collectively make a choice from the alternatives.

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Advantages of Group Decision Making

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 Advantages of Group Decision Making

• More background knowledge

• More alternatives generated
• More understanding of the decision
• More support for decision
• Helps fulfill social needs

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 Disadvantages of Group Decision
Making

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 Disadvantages of Group Decision
Making

• Time consuming, inefficient

• Ineffective Compromise decisions
• Groupthink, social pressure, conflicts
• Lack of clear responsibility

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 Group Decision Making Techniques
Brainstorming
Brainstorming uses a face to face interactive group to spontaneously
suggest a wide range of alternatives freely for decision making.

Nominal Group Technique

Used most often to generate creative and innovative alternatives or
ideas. Once alternative solutions are listed , group members vote by
usually rank ordering the various alternatives. The highest ranked
alternative represents the decision of the group.

Delphi Technique
It is unique because it is a group process using written responses to a
series of questionnaires instead of physically bringing individuals
together to make a decision.
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 Group Decision Making Techniques
Majority Rule
This refers to a decision-making rule where each member of the
group is given a single vote, and the option that receives the
greatest number of votes is selected.

Group Decision Support Systems (GDSS)

GDSS are interactive computer-based systems that are able to
combine communication and decision technologies to help groups
to make a better decision.

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 Why Managers make Bad Decisions

 Being influenced by initial impression

 Justifying past decisions
 Seeing what you want to see
 Being influenced by emotions
 Overconfidence
(Daft, 2012)

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End

Q’s and Clarifications if any

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