Decision-making

 Decision making is a
process of identifying
alternatives and choosing
the right course of action
appropriate to a situation.

By
Dr.Bandana Nayak
Characteristics of
Decision-making

 It is a process of choosing consciously a course of

action from various alternatives.
 It is an intellectual activity which need a conscious
effort.
 The success of a decision depends on its quality.
 Managerial decisions are of two types:
problem solving and opportunity finding.
 It is goal directed. All decisions try to reach at
something.
 Personal preferences and values are important
aspects in decision making
Types of Managerial Decisions

 Personal and Organisational Decisions

 Policy and Routine Decisions
 Programmed and Non-programmed Decisions
Types of Managerial Decisions
 Routine decisions are routine and repetitive
 Analytical decisions have a number of variables and
the outcome of each variable can only be computed
and analysed.
 Judgmental decisions have a limited number of
decision variables and the outcome of each variable is
unknown
 Adaptive decisions have large number of variables.
But, their outcomes are not predictable
Approach to Decision-making

Henry Mintzberg’s Three-phase Approach

 Identification - 1. Recognition
2. Diagnosis
 Development - 1. Search
2. Design
 Selection - 1. Judgement 2. Analysis
3. Bargaining 4. Authorisation
Decision-making under Different
Conditions
 Decision-making under Certainty - decision maker
has perfect knowledge about alternatives and the
conditions associated with them
 Decision-making under Risk - The risk factor occurs
in decision-making when a single action leads to
several possible outcomes with varying degrees of
probabilities
 Decision-making under Uncertainty - Here a
decision leads to several possible outcomes and the
risk associated with each is unknown.
Models of Decision-making process

 Economic Model - The decision makers are

economically sensible and they take decisions, which
are best for the economic interest of the organisation
 Administrative Model - Though it is desirable in
practice, however, most of the managerial decisions
made are not fully rational or logical
 Political Model - It is a model pertaining to the non-
programmed decisions, which are novel and
unstructured.
Heuristics

 It is a method of decision making that uses the

rules of thumb to find a solution or answer.
 Availability
 Representativeness
 Adjustment
Techniques for Group Decision-
making

 Brainstorming - Alex F. Osborn developed this

technique to stimulate creative thinking
 Synectics - It is a technique developed by William
J..Gordon. The technique is a formal creativity
technique for generating alternatives.
 Nominal Grouping - It is structured group meeting
among the members
 Delphi Technique - In this technique members of a
group will give their opinion by filling in a questionnaire