Fundamentals of

Management

Decision Making
BBA I Semester

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 Decision Making
A decision is an act of choice wherein an
executive forms a conclusion about what must
be done in a given situation. It involves the
act of choice and the alternative chosen out of
the available alternatives.

The process is concerned with searching and

evaluating alternatives to a problem and
selecting the best alternative.

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 Elements of Decision Making
• The Decision Maker
• The Decision Problem
• The environment in which the decision is to be
made
• Objective of the Decision Maker
• Alternative Course of Action
• Outcome expected from various alternatives
• Final choice of the alternative

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 Characteristics
1. It is a process of choosing a course of action from
among the alternatives
2. Involves application of intellectual abilities
3. End process preceded by deliberate action and
reasoning
4. Always related to the environment. A manager may
take different decisions under different situations.
5. Involves time dimension and time lag
6. It is always for a purpose
7. Involves actions like defining the problem, probing
and analysing and making final choice.

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 Types of Decisions
1. Routine and Strategic Decisions
2. Policy and Operating Decisions
3. Organisational and Personal Decisions
4. Programmed and Non-programmed
decisions
5. Individual and Group Decisions.

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 Types of Decisions
1. Routine Decisions and Strategic Decisions

Routine Decisions: they are made repetitively following

certain established rules, procedures and
policies. Taken at the lower or middle level.

Strategic Decisions: the strategic decisions relate to

policy matters and requires a thorough fact
finding and analysing of possible alternatives.

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 Types of Decisions

2. Policy and Operating Decisions

Policy Decisions: Policy Decisions are important and

affect the whole enterprise.
Operating Decisions: they are taken by lower or middle
level mgnt. and are applicable to a particular
department or section. For eg.
Giving Bonus is a bonus decision, but calculations etc.
are done at the operative level.

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 Types of Decisions
3. Organisational and Policy Decisions:

Organisational Decisions: those decisions which are taken by

manager because of his official capacity. Such decisions
can be delegated.

Personal Decisions: these decisions relates to manager as an

individual and not as a member of orgn. And can not be
delegated.

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 Types of Decisions
4. Programmed and Non – Programmed Decisions

Programmed Decisions are of routine and repetitive nature which

are to be dealt according to specific procedures. Eg.
Purchase of raw material

Non Programme Decisions: they are generally related to

uncertain events and there is no standard procedure.

For eg. Mass Absenence

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 Types of Decisions
5. Individual and Group Decisions

Individual Decisions: when the decision is taken

by single individual. Mostly in the case of
Single owner.
Group Decision: when the decision in taken after
mutual consultation between group of members
like Board of Directors or Committee.

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 Stages in Decision Making Process
1. Diagnosing and Defining the Problem
2. Analysing the Problem
3. Collection of Data
4. Developing Alternatives
5. Review of Key Factors
6. Selecting the Best Alternative
7. Putting the Decision into practice
8. Follow up

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