Decision making

DECISION MAKING
Mamun Muztaba
MC (Asst Professor)@ Bangladesh Institute of Management

THE RELATIONSHIP AMONG OBJECTIVES, PROBLEM
SOLVING, AND DECISION MAKING.
• When you do not meet your objectives, you have a problem. A problem exists
whenever objectives are not being met. In other words, you have a problem
whenever there is a difference between what is actually happening and what you
want to happen.
• Problem solving is the process of taking corrective action to meet objectives.
• Decision making is the process of selecting a course of action that will solve a
problem. Decisions must be made when you are faced with a problem.
MAMUN MUZTABA, MC, BIM
The word decision has been derived from the Latin word "decidere" which means
"cutting off". Thus, decision involves cutting off of alternatives between those that are
desirable and those that are not desirable.
Decision is a kind of choice of a desirable alternative.
Ray A Killian, "A decision in its simplest form is a selection of alternatives".

PROBLEM SOLVING & DECISION MAKING
All managers perform the same four functions of management. While performing
these functions, you must make decisions and solve problems.
 When planning, you first make decisions about objectives and when, where, and how they will be met.
 When organizing, you must make decisions about what to delegate and how to coordinate the
department’s resources.
 When staffing, you must decide whom to hire and how to train and evaluate employees.
 To lead, you must decide how to influence employees.
 To control, you must monitor progress and select methods to ensure that objectives are met and take
corrective action when needed.

CHARACTERISTICS OF DECISION
MAKING
1. The decision-maker has freedom to choose an alternative.
2. Decision-making may not be completely rational but may be judgmental and emotional.
3. Decision-making is goal-oriented.
4. Decision-making is a mental or intellectual process because the final decision is made by the decision-
maker.
5. A decision may be expressed in words or may be implied from behaviour.
6. Choosing from among the alternative courses of operation implies uncertainty about the final result of
each possible course of operation.
7. Decision making is rational. It is taken only after a thorough analysis and reasoning and weighing the
consequences of the various alternatives.

THE DECISION-MAKING MODEL/ PROCESS
A problem is defined as a
discrepancy between an existing
and a desired state of affairs.
Decision criteria are factors that are
important (relevant) to resolving the
problem:
Salary, Opportunity to progress, Job
Environment, Incentives, Facilities,
Job securities, Location, Timings Development of Alternatives
identifying viable alternatives are listed
(without evaluation) that can resolve
the problem name.
Appraising each alternative’s
strengths and weakness evaluation
using decision criteria and
evaluation against weighted criteria.
Choosing the best alternative, the
alternative with the highest total
weight is chosen.
Put the chosen alternative into action, after
choosing the best alternative decision in to
action by conveying it to those affected and
getting their commitment to it.

BONUS!!!

WHAT IS YOUR DECISION-MAKING
STYLES??
 Place a number between 1 (indicating “This behavior is common for me”) and 5 (indicating “This
behavior is not common for me”) on the line preceding each statement.
1. Overall, I make decisions quickly. (____ )
2. When making decisions, I go with my first thought or hunch. (____ )
3. When making decisions, I don’t bother to recheck my work. (____ )
4. When making decisions, I gather little or no information. (____ )
5. When making decisions, I consider very few alternative options. (____ )
6. When making decisions, I usually decide well before any deadline. (____ )
7. When making decisions, I don’t ask others for advice. (____ )
8. After making decisions, I don’t look for other alternatives or wish I had waited longer. (____ )
Total score(____ )

DECISION-MAKING STYLES
Reflexive Style
• A reflexive decision maker likes to make quick decisions (“shooting from the hip”) without taking
the time to get the information that may be needed and without considering many alternatives.
On the positive side, reflexive decision makers are decisive; they do not procrastinate. On the
negative side, making quick decisions can lead to waste and duplication.
Reflective Style.
• A reflective decision maker likes to take plenty of time to make decisions, gathering considerable
information and analyzing several alternatives. On the positive side, the reflective type does not
make hasty decisions. On the negative side, the reflective type may procrastinate, lose
opportunities, and waste valuable time and other resources.
Consistent Style.
• In the fast-changing environment, making better decisions faster is important to success.
However, rushing decisions like Samsung can be costly. Thus, many organizations are slowing
down decisions and taking the time to analyze data as consistent decision makers, including
speedy, agile companies Amazon, Facebook, and Google. Consistent decision makers tend to
make decisions without either rushing or wasting time.

TYPES OF DECISIONS
Programmed Decisions:
• They are routine and
repetitive and are made
within the framework of
organizational policies
and rules.
• These policies and rules
are established well in
advance to solve
recurring problems in the
organization.
• They have short-run
impact.
• They are, generally, taken
at the lower level of
management.
Non-Programmed Decisions:
 Decisions taken to meet
non - repetitive problems.
 Relevant for solving
unique / unusual problems in
which various alternatives
cannot be decided in
advance.
 A common feature of
non-programmed decisions
is that they are novel and
non-recurring and therefore,
ready made solutions are not
available.
 Since these decisions are
of high importance and have
long-term consequences,
they are made by top level
management.

Strategic Decisions:
 Basic decisions or strategic decisions are decisions which are of crucial importance.
 Strategic decisions a major choice of actions concerning allocation of resources and
contribution to the achievement of organizational objectives.
 Decisions like plant location, product diversification, entering into new markets,
selection of channels of distribution, capital expenditure etc are examples of basic or
strategic decisions.
TYPES OF DECISIONS

Tactical Decisions:
 Routine decisions or tactical decisions are decisions which are routine and repetitive.
 They are derived out of strategic decisions.
 The various features of a tactical decision are as follows:
1. Tactical decision relates to day-to-day operation of the organization and has to be taken very
frequently.
2. Tactical decision is mostly a programmed one. Therefore, the decision can be made with in the
context of these variables.
3. The outcome of tactical decision is of short-term nature and affects a narrow part of the organization.
4. The authority for making tactical decisions can be delegated to lower level managers because : first,
the impact of tactical decision is narrow and of short-term nature and Second, by delegating authority
for such decisions to lower-level managers, higher level managers are free to devote more time on
strategic decisions.
TYPES OF DECISIONS

1. Structured decisions are the decisions which are made under the established situations
for example hiring a new employee while unstructured decisions are made under the
emergent situation, for example fire breakout.
•
2. Structured decisions are the programmable decisions and they are preplanned for
example the payroll for employees while unstructured decisions are creative and they are
not preplanned for example if fire break there and then manager can make decision
unplanned.
•
3. Structured decisions are made in the situations which are fully understood while in
unstructured decisions the situations are uncertain and unclear.
TYPES OF DECISIONS
Story…..
Structured Decisions Vs Unstructured Decisions

SEMI-STRUCTURED DECISION MAKING
Semi-structured problems falls between structured and unstructured problems.
Only some of the phases are structured in the Semi-structured problems.
It requires a combination of standard procedures and individual judgment.
Ex- annual Evaluation of employees, trading bonds, setting marketing budgets for
consumer products.

DECISION TREE ?
A decision tree is a flowchart-like diagram that shows the various outcomes from a series of decisions. It can be
used as a decision-making tool, for research analysis, or for planning strategy. A primary advantage for using a
decision tree is that it is easy to follow and understand.
Decision trees have three main parts:
 a root node,
 leaf nodes and
 branches.
The root node is the starting point of the tree, and both root and leaf nodes contain questions or criteria to be
answered. Branches are arrows connecting nodes, showing the flow from question to answer. Each node
typically has two or more nodes extending from it. For example, if the question in the first node requires a "yes"
or "no" answer, there will be one leaf node for a "yes" response, and another node for "no.“
Decision trees are most commonly used in the financial world for areas such as loan approval, portfolio
management, and spending.
A decision tree can also be helpful when examining the viability of a new product or defining a new market for an
existing product.

Decision making

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