This document discusses decision making and the decision making process. It defines decision making as choosing from two or more alternatives. It then outlines several approaches to decision making, including rational decision making based on analyzing costs and benefits, and intuition based on experience and judgment. The document also details the typical steps in the rational decision making process, which include identifying a problem, criteria for evaluation, weighting criteria, developing alternatives, analyzing alternatives, selecting an alternative, implementing the decision, and evaluating the decision.

1. Decision Making
The essence of manager’s job

2. Topics to be Covered…..
 What is Decision?
 What are Decision Making Approaches?
 The Decision Making Process.
 The managers as Decision Makers.
 What is Problem?
 What are the types of Problems?
 Types of Decisions.
 Conditions of Decision Making.
 Decisions making styles.
 Decision making Biases and Errors.

3. What is Decision?
 Making a choice from two or more alternatives.
 So, decision is a choice.
 Suppose you have some money to invest , and you are considering different
investment alternatives.
Problem●
Alternative 1●
Alternative 1●
Alternative 2

4. What are Decision Making Approaches?
 Rational Decision Making (Value Maximizing Approach)
– Based on logics and normal thinking.
– Cost and benefits analysis.
– Select those alternatives where benefits are more than costs.
– Level of information is high.
– One clear goal, and all the alternatives available to achieve that
Goal (Problem) are available.
Investment● Rafhan● PTC● MTM

5.  Rational Decision Making (Value Maximizing Approach)
– Managers make decisions rationally, but are limited /bounded by
their ability to process information.
– You are bound to make decisions those are not good.
Problem●
A●
B●
C
Information may be
available to managers
but they are bound to
make irrational
decision because of;
1. Order of boss,
2. Lack of time,
3. System,
4. Limited resources.

6. Intuition
** Predicting Stock Market Fluctuations
** Setting future perspective of business
organization for next 5 years.
** Setting Pakistan's future direction for
next 20 years.
Making decisions on the basis of
experiences, feelings, judgments, skills,
training, knowledge, senses, sub-
conscious, mental processing, ethical
values and culture.
** Usually for unseen problems.

7. The Decision Making Process
Step
No.
Step Description Step Example
1 Identification of a Problem. ‘ I need a Automobile or Car’
2 Identification of decision criteria. 1. Price
2. Durability
3. Mileage
4. Style
3 Allocation of weights to decision criteria. 1. Price ----------------10
2. Durability----------08
3. Mileage -------------07
4. Style ----------------05
4 Development of Alternatives. s I. GLI Toyota Corolla
II. Honda Citi
III. Suzuki Liana
These are given
from 10.

8. 5 Analysis of Alternatives
6 Selection of Alternative. I. GLI Toyota Corolla
II. Honda Citi
III. Suzuki Liana
7 Implementation of selected alternative.
(decision)
‘ Purchased GLI Toyota Corolla’
8 Evaluation of decision ‘s effective. ‘ I am satisfied with decision, because this car has met all the
criterion I was looking for’.
Price
[10]
Durability
[8]
Mileage
[7]
Style
[5]
Total
GLI
Toyota
Corolla
8 8 7 4 27
Honda
Citi
8 5 5 5 23
Suzuki
Liana
10 3 6 2 21

9. The Decision Making Process
Step
No.
Step Description Step Example
1 Identification of a Problem. ‘ I am feeling hungry and want to eat Pizza’
2 Identification of decision criteria. 1. Price
2. Taste
3. Environment
4. Customer Services
3 Allocation of weights to decision criteria. 1. Price ---------------- 50
2. Taste----------------100
3. Environment ----- 80
4. Customer Services -70
4 Development of Alternatives. I. Pizza Hut
II. AFC Pizza Shop
III. Pizza Shop D- Ground
These are given
from 100.

10. 5 Analysis of Alternatives
6 Selection of Alternative.
I. Pizza Hut
II. AFC Pizza Shop
III. Pizza Shop D- Ground
7 Implementation of selected alternative.
(decision)
‘ Got there and eaten Pizza’
8 Evaluation of decision ‘s effective. ‘ I am satisfied with decision, because pizza hut’s pizza met
criterion those I was intended for’ .
Price
[50]
Taste
[100]
Enviorn-
ment
[ 80]
Customer
services
[70]
Total
Pizza Hut 30 100 80 70 280
AFC Pizza
Shop
40 80 60 50 230
Pizza
Shop D-
Ground
50 60 40 30 180