Unit II Decision Making
-
Upload
ashwini-salian -
Category
Documents
-
view
230 -
download
0
Transcript of Unit II Decision Making
-
7/31/2019 Unit II Decision Making
1/24
Decision Making
-
7/31/2019 Unit II Decision Making
2/24
Definition of DM
Decision Making is the Cognitive processleading to the selection of a Course Of
Action among Alternatives According to Rollinson:- Decision making is
the process of producing a solution to arecognized problem
-
7/31/2019 Unit II Decision Making
3/24
Cont.
Acc to Allen, Management decision-making is the work a manager performs to
arrive at conclusion and judgment. It is the choice made by the decision
maker about what should be or should notbe done in a given situation.
-
7/31/2019 Unit II Decision Making
4/24
Elements of Decision-makingprocess The Decision-maker
The Decision problem
The environment in which the decision is to be
made. The objective of the decision-maker
The alternative courses of action
The outcomes expected from variousalternatives
The final choice of the alternative
-
7/31/2019 Unit II Decision Making
5/24
Decision-making involves the entireprocess of establishing goals, defining
tasks, searching for alternatives, anddeveloping plans in order to find the bestanswer to the decision problems.
-
7/31/2019 Unit II Decision Making
6/24
CHARACTERISTICS OFDECISION-MAKING
It is the process of choosing the bestcourse of action from among the alternative
courses of action. It is a mental or intellectual process.
It is always purposive or goal-oriented.
It may be positive or negative. A decision may be expressed in words or
may be implied from behavior.
-
7/31/2019 Unit II Decision Making
7/24
Cont..
It is the end process preceded bydiscussions and deliberations andreasoning.
Decision making is a blend of thinking,deciding and action.
Decision-making involves certain
commitment. Decision-making involves a time decision
and a time lag.
-
7/31/2019 Unit II Decision Making
8/24
Cont..
It is always related to environment orcircumstances or situations.
Decision-making is both a managerialfunction and an organisational process.
Decision-making is rational.
-
7/31/2019 Unit II Decision Making
9/24
Importance of Decision-making
No business can survive without effectivedecision-making.
It is an essential part of every function ofmanagement.
It is the core of managerial activity.
Decision-making and planning are deeplyinterlinked.
-
7/31/2019 Unit II Decision Making
10/24
Cont..
Acc to Peter.F.Drucker, whatever a
manager does, he does through decision-
making.
-
7/31/2019 Unit II Decision Making
11/24
Stages in Rational Decision-making
Rational Decision is a ability to follow asystematic, logical, thorough approach in
decision-making. Judicious, sensible, scientific.
-
7/31/2019 Unit II Decision Making
12/24
Stages :-
Diagnosing and defining the problem Analysing the problem
Collection of data
Developing alternatives
Review of key factors
Selecting the best alternative
Putting the decision into practice
Follow up
-
7/31/2019 Unit II Decision Making
13/24
Diagnosing and defining theproblem
Identify what business practices are
causing the company to incur losses.
Are the prices too low or expenses toohigh?
Sufficient time should be spent on definingthe problem .
Clear definition of the problem is veryimportant as the right answer can be foundonly to a right question.
-
7/31/2019 Unit II Decision Making
14/24
Analysing the problem
Classifying the problem and gatheringinformation.
To know who should take the decision andwho should be consulted in taking it.
- the nature of the decision (strategic or
routine) -the impact of the decision on other
functions
-
7/31/2019 Unit II Decision Making
15/24
cont..
-the futurity of the decision
- the periodicity of the decision
The limiting or strategic factor relevant tothe decision.
-
7/31/2019 Unit II Decision Making
16/24
Collection of Data
Trying to analyse without facts is likeguessing directions at a crossing without
reading the highway signboards. Decision is as good as the information on
which it is based.
Money and time spent- to gatherinformation.
-
7/31/2019 Unit II Decision Making
17/24
Developing Alternatives
Alternatives exist for every decisionproblem.
-
7/31/2019 Unit II Decision Making
18/24
Review of Key Factors
A limiting factor- one which stands in theway of accomplishing the desired goal.
-
7/31/2019 Unit II Decision Making
19/24
Selecting the Best Alternative
Intuition choosing a solution that seemsto be good at that time.
Is to weigh the consequences of oneagainst the those of others.
-
7/31/2019 Unit II Decision Making
20/24
Acc to Peter Drucker - Criteria
Risk
Economy of Effort
Situation or Timing Limitation of Resources
-
7/31/2019 Unit II Decision Making
21/24
Putting the Decision into Practice
Implementationresistance by thesubordinates who are affected by the
decision. Make subordinates committed to the
decision.
-
7/31/2019 Unit II Decision Making
22/24
Follow Up Reasons are :-
If the decision is a good one, one will knowwhat to do if faced with the similar problem
again.
If the decision is bad one, one will knowwhat not to do the next time.
If the decision is a bad and one follows upsoon enough, corrective action may still bepossible.
-
7/31/2019 Unit II Decision Making
23/24
Kinds of Decision
Programmed Decisions and Non-Programmed Decisions
Strategic Decisions and Routine Decisions Policy Decisions and Operating Decisions
Major Decisions and Minor Decisions
Organisational Decisions and PersonalDecisions
-
7/31/2019 Unit II Decision Making
24/24
Cont
Individual Decisions and Group decisions
Departmental Decisions, Interdepartmental
Decisions and Enterprise Decisions Objective Decisions and Subjective
Decisions
Off-the-cuff Decisions and PlannedDecisions