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 
³Decision making is the actual selection from among alternatives of a course of action .´

By: Koontz and O¶Donnel 
³Decision 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 ³Rational 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
TYPE FREQUENCY GOALS INFO WELL STRUCTURED REPETITIVE, ROUTINE CLEAR, SPECIFIC READILY AVA

NONPROG DEC
POORLY ST NEW, UNUSUAL VAGUE NOT AVAILABLE MAJOR UPPER LONG JUDGEMENT

CONSEQUENC MINOR ORG LEVEL TIME LOWER SHORT

BASIS OF SOL SET PROCEDURE

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

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