Decision Making- Meaning and Process

1. Decision Making is the process of choosing a
course of action from among alternatives to
achieve a desired goal.
According Haynes and Massie, "Decision Making
is the process of selection from a set of
alternative courses of action which is thought to
fulfil the objective of a decision problem more
satisfactorily then others"

2. Example
 A farmer with his wolf, goat, and
cabbage come to the edge of a river
they wish to cross. There is a boat at
the river’s edge, but of course, only
the farmer can row. The boat can
only handle one animal/item in
addition to the farmer. If the wolf is
ever left alone with the goat, the
wolf will eat the goat. If the goat is
left alone with the cabbage, the
goat will eat the cabbage. What
should the farmer do to get across
the river with all his possessions?

4. DECISION
MAKING:
PROCESS
1.
Recognising
and defining
the situation
2.
Identifying
Alternatives
3.
Evaluating
Alternatives
4.
Selecting The
Best Alternatives
5.
Implementing
The Chosen
Alternative
6.
Follow-up and
Evaluation

5. 1. Recognising and defining the situation
The decision-making process begins with the
recognition of the problem that requires a decision.
The threats and opportunities created by
environmental changes may also create decision
problems.
In order to recognise the problem quickly, a
manager must continuously monitor the decision-
making environment.
Imagination, experience and judgement are required
for detection of problems that require managerial
decisions.

6. 2. Identifying Alternatives
The next step is to search for the various possible
alternatives. An executive should not jump on the
first feasible alternative to solve the problem quickly.
A decision maker has to use his/her creativity to spot
and interrelate them. A reasonably wide range of
alternatives increases the manager’s freedom of
choice.
Time and cost constraints should be kept in mind.
Management should insure that the best alternative is
considered before a course of action is selected.
Relevant information must be collected and analysed
for this purpose.

7. 3. Evaluating Alternatives
Once the alternatives are discovered, the next stage is to
evaluate each alternative. Evaluation is the process of
measuring the positive and negative consequences of each
alternative. Management must balance the cost against
possible benefits.
Management must set some criteria against which the
alternatives can be evaluated. Peter Drucker has suggested
the following criteria to evaluate the alternative courses of
action:
(a) RISK: Degree of risk is involved in each alternative.
(b) ECONOMY OF EFFORT: Cost, time and effort involved
in each alternative.
(c) TIMING: Whether the problem is urgent.
(d) LIMITATION OF RESOURCES: Physical, financial and
human resources available with the organisation.

8. 4. Selecting The Best Alternatives
After evaluation, the optimum alternative is selected.
Optimum alternative is the alternative that will
maximize the results under given conditions. Choice
of the best alternative is the most critical point in the
decision-making. The ability to select the best course
of action from several possible alternatives separates
the successful managers from the unsuccessful ones.
Past experience, experimentation, research and
analyses are useful in selecting the best alternative.

9. Selecting The Best Alternatives

10. 5. Implementing The Chosen Alternative
Once a decision is made, it needs to be implemented.
Implementation involves several steps:
1.The decision should be communicated to those
responsible for its implementation.
2.Acceptance of the decision should be obtained.
3.Procedures and time sequence should be
established for implementation

11. 6. Follow-up and Evaluation
The implementation of the decision should be constantly monitored . In
case the feedback indicates that the decision is not yielding the desired
results, necessary changes should be made in the decision or in its
implementation.