2. Decision & Decision Making ProcessDecision & Decision Making Process
- A choice from two or more alternatives.
- A set of eight steps that include identifying a
problem, selecting an alternative, and evaluating the
decision’s effectiveness
3. Decision Making Process……Decision Making Process……
Step 1 – Identifying a problemIdentifying a problem
Problem- A discrepancy between an existing and a
desired state of affairs
Step 2 – Identification of decision criteriaIdentification of decision criteria
Criteria – That define what’s relevant in a problem
4. Decision Making Process……Decision Making Process……
Step 3 – Allocating weights to the criteriaAllocating weights to the criteria
Prioritising
Step 4 – Developing AlternativesDeveloping Alternatives
List the viable alternatives
Step 5 – Analysing AlternativesAnalysing Alternatives
Appraising alternative against each criteria established in
steps 2 & 3
5. Decision Making Process……Decision Making Process……
Step 6 – Selecting an alternativeSelecting an alternative
Chosing the best alternative from
amoung those considered
Step 7 – Implementing theImplementing the
AlternativeAlternative
Implementing decisions effectively –
Planning – organising - Leading
7. Manager As Decision MakerManager As Decision Maker
Mangers are frequently called Decision Maker
Decision Making is synonyms to Management
8. Making DecisionsMaking Decisions
Rationality – Bounded Rationality - IntuitionRationality – Bounded Rationality - Intuition
Rational Decision Making
Describes choices that are consistent and value
maximising with in specified constraints.
Assumptions in Rationality :-
. The problem is clear and unambiguous
. A single, well defined goal is to be achieved.
. All alternatives and cosequences are known
. Prefrences are clear constant and stable
. No time or cost constraints exist.
9. Bounded RationalityBounded Rationality
Decision making behaviour is rational, but limited
by an individual’s ability to process information.
Satisficing – Acceptance of solutions that are
good enough.
Escalation of commitment – An increased
commitment to a previous decision despite
evidence that it may have been wrong
10. IntuitionIntuition
Making decisions on the basis of experience,
feelings, and accumulated jugement.
Intuition
Experienced Based
Affect - initiated
Subconscious
Mental processing
Values or ethics
Based
Cognitive - Based
11. Types of Problems & DecisionsTypes of Problems & Decisions
Structured Problems – Programmed
decisions
- Straight forward, familiar and easily defined problems
Programmed decisions
- A repetitive decision that can be handled by a routine
approach
- Procedure
- policy
- Rules
12. Types of Problems & DecisionsTypes of Problems & Decisions
Unstructured Problems – Nonprogrammed
decisions
- Problems that are new or unusual and for which
information is ambiguous or incomplete
- A specific decision crafted for a unique problem
13. Types of Problems & DecisionsTypes of Problems & Decisions
Crisis and Crisis Management
Crisis is an unexpected problem that can lead to a
disaster if not resolved quickly and appropriately.
Crisis Management is preparation for the
management of crisis that threaten an organisation’s
health and well-being.
Crisis Management teams & Plans can be developed
to deal with various contingencies
14. Decision Making Conditions/Decision Making Conditions/
EnvironmentsEnvironments
Certain Environment
A situation offers complete information on possible action
alternatives and their consequences.
Risk Environment
Lacks complete information but offers probabilities of the
likely out comes for possible action alternatives
Uncertain Environment
A situation lacks so much information that is difficult to
assign probabilities to the likely out comes of alternatives
15. Decision Making StylesDecision Making Styles
Decision making styles differ along two
dimentions:-
1) Way of Thinking
2) Tolerance for Ambiguity of an individual
17. Decision Making StylesDecision Making Styles
High
Low
rational Intuitive
Analytic
Concep-
tual
Directive
Behav-
ioral
Tolerance
For
Ambiguity
Way of Thinking