Decision Making

“Decision making is a conscious human process

involving both individual and social phenomenon
based upon factual and value premises which
concludes with a choice of one behavioral
activity from among one or more alternatives
with the intention of moving towards some
desired state of affairs.”

By- Fremont A. Shull

 Concept of decision and
decision making
The word decision has been derived from the latin word
‘decidere’ which means ‘a cutting away or a cutting off, or in a
practical sense’. Thus, a decision involves a cut of alternatives
between those that are desirable and those that are not
desirable. The decision is a kind of choice of a desirable
alternative.

“A decision represents a judgement; a final resolution of a

conflict of needs, means or goals; and a commitment to action
made in face of uncertainty & complexity.”
By- Felix M.Lopez
 Features of Decision Making
 Decision making implies that there are various
alternatives and the more desirable alternatives
is chosen to solve the problem.
 Existence of alternatives suggests that the
decision maker has freedom to choose an
alternative of his liking.
 It may not be completely rational but may be
judgemental and emotional.
 It is like any other management process, is goal
directed.
Types of decision
 Programmed and Non-Programmed
Decision.

 Strategic Decision and Tactical

Decision.
 Programmed Decision
Programmed decision are
routine and repetitive and
are made with in the
framework of organisational
policies and rules.
Non-Programmed decision
Non-programmed decisions
are relevant for solving unique
and unusual problems in which
various alternatives cannot be
decided in advance.
 Strategic Decision
Strategic decision is a major
choice of actions concerning
allocation of resources and
contribution to the achievement
of organisational objectives.
 Tactical Decision
Tactical decision is derived out
of strategic decision. It relates
to day-to-day working of the
organisation and is made in the
context of well-set policies and
procedures.
Decision Making Process

Specific Problem Search for

objective indetification alternatives

Evaluation of
feedback alternatives

Choice of
Results Action alternatives
 Specific Objectives
The need for decision making arises
in order to achieve certain specific
objectives. Every action of human
being is goal directed. This is true
for decision making also which is an
action.
 Problem Identification
Since a particular decision is made in the
context of certain given objectives,
indentification of problem is the real beginning
of decision-making process. A problem can be
indentified much clearly, if managers go
through diagnosis and analysis of the problem.
 Search for Alternatives
Manager can search the alternatives by
his own past experience or by using
creative techniques. In this the
manager will confine their search for
those alternatives which will overcome
the limiting factors.
 Evaluation of Alternatives
After the various alternatives are
indentified, the next step is to
evaluate them and select the one
that will meet the choice criteria.
 Choice of Alternatives
Choice aspect of decision making is
related to deciding the most acceptable
which fits with the organisational
objectives. It may be seen that the
chosen alternative should be acceptable
in the light o the organisational
objectives
 Action
Once the alternative is selected, it is
put into action. Truly speaking, the
actual process of decision making
ends with the choice of an alternative
through which the objectives can be
achieved.
 Results
When the decision is put into
action, it brings certain results.
Therefore managers should take
up a follow-up action in the light
of feedback received from the
results.
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