2.decision making


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2.decision making

  1. 1. The job of a manager Decision Making
  2. 2. Meaning of Decision making Decision making is the process of choosing a particular course of action from among the alternatives available. It involves judgement. Decision making is a process of responding to a problem by searching for and selecting a solution or course of action that will create value for organizational members. The objectives of decision making is to achieve an organizational goals or to solve a problem.
  3. 3. Types of Problems Structured problems • Involved goals that clear. • Are familiar(have occurred before) • Easily and completely defined- information about the problem is available. Unstructured Problems • Problems that are new or unusual • Goals are not clear. • Information is ambiguous or incomplete.
  4. 4. Types of Decisions There are basically two kinds of decision that managers called upon to make: Programmed and  Non-programmed Decision
  5. 5. Programmed decision • Programmed decision is a repetitive decision the can be handled by a routine approach. • They are relatively structured and information are available and complete. Here a manager makes a decision once and he uses that decision again and again. • Examples:
  6. 6. Non-programmed decisions Non programmed decisions are used for non- routine matters of an organization. They are unique in nature and every situation requires special attention. Non- programmed decisions are those decisions that are relatively unstructured and occurs much less often than a programmed decisions. Examples:
  7. 7. Programmed Versus Non- Programmed Decision Making Characteristics Programmed decisions Non- Programmed Decision Type of problem Structured Unstructured Managerial level Lower Level Upper Level Frequency Repetitive New, unusual Information Readily available Ambiguous or incomplete Time frame Short Relatively long
  8. 8. The Decision making process Step 1: Identify the problem: Decision making process starts with identification of the problem. Problem is the differences between the actual and desired situation. Step 2: Develop alternative solutions: In this step managers developed alternative solutions of the problem.
  9. 9. The Decision making process They can develop alternative solution in the following ways- Brain storming Talk to the staff members Talk to major customers Study hard Allow subordinates to participate in a decision making process
  10. 10. The Decision making process Step 3:Evaluate alternative solutions: Once managers have developed a set of alternatives, they must evaluate each one on the basis of three questions- Is this alternative feasible? Is the alternative provide a satisfactory solution? What are the possible consequences for the rest of the organization?
  11. 11. The Decision making process Step 4 :Make a choice: Making a choice is not a easy task, it is the most complex task. It is one of the most difficult part of the decision making process. Managers can use following factors as a guideline in making a decision- Concentrate on differences Identify must and should No compromise with must Relate resource requirement to resource available Consider time as a great factors
  12. 12. Characteristics of Effective decision making It is logical and consistent. It requires only as much information and analysis as is necessary to resolve a particular dilemma. It is straightforward, Reliable, Easy to use and understand Flexible.  
  13. 13. Risk involved in decision making Decision making is undoubtedly a risky job on the part of a manager. But all decisions are not equally risky. From the point of involvement of risk, decision making may be of following types: Decision making under conditions of certainty: In a situation involving certainty, people are reasonably sure about what will happen when they make decision. Here the risk of the manager is minimum. A manager is making decisions under conditions of certainty when the following conditions are fulfilled:
  14. 14. Risk involved in decision making 1. Information available to make a decision are sufficient. 2. Outcome of a decision may be predicted with a fair amount of certainty.  Decision making under conditions of Risk: In risk situation, a factual information may exist, but it may be incomplete. Here risk of the manager is moderate. A manager is making decision under conditions of risk when the following conditions are fulfilled: 1. Information available is not sufficient 2. Outcome of the decision may only be guessed
  15. 15. Risk involved in decision making Decision making under Uncertainty: In a situation of uncertainty, people have only information, but they do not know whether or not the data are reliable and they are very unsure about whether or not the situation may change. Here the risk of the manager is the highest. A manager is mainly making decision under conditions of uncertainty when the following conditions are fulfilled: 1. Very little of no information are available 2. Outcome is unpredictable.