Decision making

What is Decision?
• Decision = A decision is a choice made from
two or more alternatives.

sohail_ranizai@yahoo.com

What is Decision
making?
“Making good decisions is a crucial skill at every level. ”
-Peter Ducker


What is Decision making?
• Decision Making is the cognitive process leading to the
selection of a course of action among alternatives.


What is Decision making?
•Every decision making process produces a
final choice.
•It can be an action or an opinion.
•It begins when we need to do something but
we do not know what.
• Therefore, decision making is a reasoning
process which can be rational or irrational, and
can be based on explicit assumptions or tacit
assumptions.

General Examples:
Shopping, deciding what to eat, What to wear,
when to sleep, etc..

Decision Making Situation:
Decision-making situations differ according to the types of
problems that must be handled.
• Certainty is a situation in which a manager can make
accurate decisions because the outcome of every
alternative is known. However, this isn’t characteristic
of most managerial decisions.
• Uncertainty is a condition in which the decision maker
chooses a course of action without complete
knowledge of the consequences that will follow
implementation.
• Risk is the possibility that a chosen action could lead to
losses rather than the intended results.
• a. Uncertainty is seen as the reason why situation is
risky.
• b. A rapidly changing environment is a major cause of
uncertainty.

“Successful leaders have the courage to take
action while others hesitate.”
- John C. Maxwell


Barriers to Good Decision
• Making
Hasty - Making quick decisions without having much
thought.
• Narrow - Decision making is based on very limited
information.
• Scattered - Our thoughts in making decisions are
disconnected or disorganized.
• Fuzzy - Sometimes, the lack of clarity on important aspects
of a decision causes us to overlook certain important
considerations.


What should I wear for class (or work)
today?
What are the
things you
consider before
making a
decision?


Which Mobile Phone should I buy?
What are the
things you
consider before
making a
decision?


Eight steps in Decision Making Process


Step-1:Identifying the
• Problem
Problem
– A discrepancy between an existing and
desired state of affairs.
• Characteristics of Problems
– A problem becomes a problem when a
manager becomes aware of it.
– There is pressure to solve the problem.
– The manager must have the authority,
information, or resources needed to solve the
problem.

Step 2: Identifying Decision Criteria
• Decision criteria are factors that are important
(relevant) to resolving the problem.
– Costs that will be incurred (investments required)
– Risks likely to be encountered (chance of failure)
– Outcomes that are desired (growth of the firm)


Step 3: Allocating Weights to the
Criteria
• Decision criteria are not of equal importance:
– Assigning a weight to each item places the items in the
correct priority order of their importance in the
decision making process.


Step 4: Developing
Alternatives
• Identifying viable alternatives
– Alternatives are listed (without evaluation) that can resolve the
problem


Step 5: Analyzing
Alternatives
• Appraising each alternative’s
strengths and weaknesses
– An alternative’s appraisal is based on its
ability to resolve the issues identified in
steps 2 and 3


Step 6: Selecting an
Alternative
• Choosing the best alternative
– The alternative with the highest total
weight is chosen.


Step 7: Implementing the
Alternative
• Putting the chosen alternative into action.
– Conveying the decision to and gaining commitment from those who
will carry out the decision


Step 8: Evaluating the Decision’s
Effectiveness
• The soundness of the decision is judged by its
outcomes.
– How effectively was the problem resolved by outcomes
resulting from the chosen alternatives?
– If the problem was not resolved, what went wrong?


Decision making on selection the effective advertisement source
for promoting the firm’s business.
(a case study)


IDENTIFICATION OF A PROBLEM
• Mr. Asif Ahmad, managing partner of the firm, wants to
promote the business of the newly made firm through an
effective advertisement campaign.


IDENTIFICATION OF DECISION
CRITERIA
• Mr. Asif have to identify the problem on
the basis of the following decision
criteria.
 Maximum Coverage
 Minimum Cost
 Nationwide Marketing
 Attractive & Effective
 Time of Campaign
 Long term benefits

ALLOCATION OF WEIGHTS
CRITERIA
1. Maximum Coverage……………………….10
2. Minimum Cost………………………………8
3. Nationwide Marketing……………………...6
4. Attractive & Effective……………………….5
5. Time of Campaign………………………….4
6. Long term benefits………………………….3


DEVELOPMENT OF ALTERNATIVE
• Mr. Asif have to select only one alternative due to limited
funds availability from three main sources of advertising.
1. Print Media.
Newspapers Adds, Magazines and broachers,
2. Electronic Media.
TVC, Internet (Website marketing, E-mail Marketing, Special
Networking , Fan Page Marketing, etc.) and mobile
Messaging (sms marketing)
3. Outdoor Media.
Celebrity Branding, Wall Chalking, Hoardings, Poll Boards
and Bill Boards etc.


ANALYSIS OF THE ALTERNATIVES
Alternatives Maximum Minimum Nationwide Attractive Time of Long term Total
Coverage Cost Coverage and Campaign Benefits
Effective

Print Media 10 2 3 4 4 2 25

Electronic Media 8 5 7 6 7 5 40

Outdoor Media 9 1 4 5 3 7 27

*Suitability marks to each of item is out of 10 points and maximum points are 60
points.

SELECTION OF AN ALTERNATIVES
• Mr. Asif selected the Electronic Media for the advertising
campaign for the business firm due to following features.
 It has good coverage then others.
 It is less Costly the others.
 It also cover the feature of Nationwide Marketing more than
others.
 It is very Attractive and effective now a days.
 Time of campaign is also good.
 It has long term benefits to firm than others.

IMPEMENTAION OF THE SELECTED
ALTERNATIVES
• Mr. Asif discussed his selected source with other partners and
all partners agreed with his decision so the advertisement
source and plan through Electronic Media is implemented and
contract is made with an E-Advertising Agency.

EVALUATION OF DECISION
EFFECTIVENESS
• Not after some weeks but after some days , firm’s sale started
and customers started buying and contracting to buy from the
firm and the sale is increasing day by day .Customers also
appreciate the advertising way of the firm.
• Firm crossed its break points in some weeks and started
generating profits.
• All credit is goes to Mr. Asif ,Managing body of firm for his very
effective decision.

Any Questions?


The End


Decision making

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