Presentation On:

“Decision Making Process”

 Decision Making
An essence to problem solving

By: Shreyansh Betala

:Vinit Bakliwal
 “ 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
managers called upon to make:
Programmed and Non-
programmed
Characteristics Programmed Non-programmed
decisions decisions
Type of problem Structured Unstructured

Managerial level Lower level Upper level

Frequency Repetitive New,unusual

Information Readily available Ambiguous or

incomplete
Time frame for Relatively long Short
solution
Solution relies on Procedures,rules, and Judgment and creativity
policies
 The Decision-
Making Process

Define Gather facts and Evaluate

the develop Alternative
Problem alternatives.

Implement Follow up and

the chosen Select the best
alternative. evaluate the chosen
Alternative alternative.
 Identify a problem and decision criteria and
allocating weights to the criteria.
 Developing, analyzing, and selecting an

alternative that can resolve the problem.

 Implemented and selected alternatives.
 Evaluating the decision’s effectiveness.
 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.
 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).
 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.
 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.
 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.
 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!”

Identification of Decision Criteria Memory and Storage, Display Quality,

Better Life,Warranty, Carrying weight
Allocation of weights to criteria Memory and Storage-10, Display
Quality -8, Better Life -6,Warranty -4,
Carrying weight-3
Development of alternatives
Toshiba, HP, Soni Vaio, Qosmio,
Gateway, Apple iBook, Lenovo, Dell
Analyzing of alternatives
Toshiba, HP, Soni Vaio, Qosmio,
Gateway, Apple iBook, Lenovo, Dell
Selection of alternatives

Toshiba, HP, Soni Vaio, Qosmio,

Implementation of alternatives Gateway, Apple iBook, Lenovo, Dell

Evaluation of decision alternatives “ Toshiba!”

 Certainty
* A situation in which a manager can make
an accurate decision because the outcome
of every alternative choice is known.
 Risk

* A situation in which the manager is able to

estimate the likelihood (probability) of
outcomes that result from the choice of
particular alternatives.
 Uncertainty
* limited information prevents estimation of
outcome probabilities for alternatives
associated with the problem and may force
managers or rely on intuition, hunches, and
“gut feelings”.
# Maximax: The optimistic manager’s choice to
maximize the maximum payoff.
# Maximin: The pessimistic manager’s choice to
maximize the minimum payoff.
# Minimax: The manager’s choice to minimize
maximum regret.
 Overconfidence
Immediate
Hindsight Gratification

Self-serving Anchoring
Decision-Making Effect
Sunk costs Errors & Biases
Selective
Perception
Randomness
Confirmation
representation
Availabilit framing
y
 It focuses on what is important
 It is logical and consistent.
 It acknowledges both subjective and
objective thinking and blends analytical with
intuitive thinking.
 It requires only as much information and
analysis as is necessary to resolve a
particular dilemma.
 It encourages and guides the gathering of
relevant information and informed opinion.
 It is straightforward,reliable, easy to use,
and flexible.
Guideline for making decision more effective
 Categorical interpretation- the problem should be
defined properly.
 Application of limiting factor- limiting factor should
be taken into account in order to analyze the external S &
W.
 Adequate information- more quantity of reliable
information leads to effective decision making.
 Considering other views- various views at the same
point are taken into account for quality decision.
 Timeliness- decision should be ,made at proper time to
meet the competitive advantages.
 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