The document discusses various aspects of management decision-making including what management is, the importance of decision-making in management, characteristics of decision-making, approaches to decision-making including normative and descriptive analyses, models of decision-making including classical, administrative and political models, techniques for improving decision-making, and guidelines for making decisions more effective. It also provides a practical test on decision-making skills.

1. Management Decisions-Making

2. What is management?
• Act of getting people together to accomplish
desired goals.
• An art and science as well.
• Encompasses an array of different functions.
• ‘Getting things done.’
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3. Decision Making in Management
• A major concern in
management.
• Sound and rational
decision -making.
• Key part of manager’s
activities.
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4. Characteristics of Decision-Making
• Decision making implies choice.
• Continuous activity/process.
• Intellectual activity.
• Based on reliable information/
feedback.
• Goal oriented process.
• A ‘means’ and not the end.
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5. Characteristics of
Decision-Making (..ctd)
• Related to specific problem.
• Time consuming activity.
• Needs effective communication.
• Pervasive process.
• Responsible job.
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6. Decision-Making process
• Defining / Identifying
the managerial problem.
• Analyzing the problem
• Developing alternative solutions.
• Selecting the best solution out of the available
alternatives.
• Converting the decision into action
• Ensuring feedback for follow-up.
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7. Decision-Making process (..ctd)
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8. Approaches to Decision Making
• Approaches by psychologists:
– Divide and Conquer strategy (problem
decomposition) – Benjamin Franklin.
– Normative Analyses.
– Descriptive Analyses.
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9. Normative Analyses
• Certain Outcomes
– Multi-atribute utility.
– Linear models.
• Uncertain Outcomes
– Decision Tree Analysis.
– Bayesian Networks.
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10. Normative Analyses (..ctd)
• Certain Outcomes
– Multi-atribute utility.
• Decisions made with more or less
certain outcomes.
– Linear models
• Weights assigned to the cue.
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11. Normative Analyses (..ctd)
• Uncertain Outcomes
– Decision Tree Analysis.
• Sequence of decisions.
– Bayesian Networks.
• Bayesian probability theory+ artificial
intelligence+graphical analysis
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12. DescriptiveAnalyses
• Social Judgement Theory (SJT).
• Information Integration Theory (IIT).
• Image Theory.
• Heuristics and Biases.
• Fast and Frugal Heuristics.
• Naturalistic Decision Making.
• Expert Decision Making.
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13. DescriptiveAnalyses (..ctd)
• Social Judgement Theory (SJT)
– Elements of normative + descriptive
analyses.
• Information Integration Theory (IIT)
– Averaging rule.
• Image Theory
– Views decision maker as processing
value image+tragectory image+strategic
image.
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14. DescriptiveAnalyses (..ctd)
• Heuristic and Biases
– Physiological shortcuts or “heuristics”.
• Fast and Frugal Heuristics
– Bounded rationality.
• Naturalistic Decision Making
– Online decision making.
• Expert Decision Making
– Need for research for better decisions.
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15. Three Decision Making Models
Political Model
Political Model
Administrative Model
Administrative Model
Classical Model
Classical Model
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16. Political Model
 Closely resembles the real environment in
which most managers and decision
makers operate.
 Decisions are complex.
 Disagreement and conflict over problems
and solutions are normal.
 Coalition building is important.
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17. Administrative Model
• How managers actually make decisions in situations
characterized by non-programmed decisions, uncertainty, and
ambiguity.
• Focuses on organizational, rather than economic.
• Two concepts are instrumental in shaping the administrative
model.
• bounded rationality: means that people have limits or
boundaries on how rational they can be.
• satisficing: means that decision makers choose the first
solution alternative that satisfies minimal decision criteria.
• Is considered to be descriptive.
• It is considered intuitive.
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18. Classical Model
Accomplishes goals that are known and agreed
upon.
Strives for certainty by gathering complete
information.
Criteria for evaluating alternatives are known.
Decision maker is rational and uses logic.
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19. Classical Models
Based on economic conditions
Is considered to be normative
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20. Diagnosis Questions
(Kepner & Tregoe)
 What is the state of disequilibrium affecting us?
 When did it occur?
 Where did it occur?
 How did it occur?
 To whom did it occur?
 What is the urgency of the problem?
 What is the interconnectedness of events?
 What result came from what activity?
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21. 7 Popular Methods
for Making Decisions
• Decision by running out of time.
• Decision by chos.
• Decision by fiat.
• Decision by coercion.
• Decision by competition.
• Decision by voting.
• Decision by inertia.
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22. Advantages of Decision Making
• Primary function of management.
• Facilitates the entire management process.
• Continuous managerial function.
• Essential to face new problems and challenges.
• Delicate and responsible job.
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23. Techniques for improving Decision Making
 Brainstorming – idea generation for decision
making.
 Nominal group technique (NGT)- problem
outlined, presentation of solution in written form,
discussion over written solutions, and final
decision.
 Delphi technique- decision made on the basis of
questionnaire filled by the respondents.
 Consensus mapping- decision made on the basis
of the report presented by the representative of each
group after 23

24. Guideline for making decision
more effective
 Categorical interpretation- the problem should be defined
properly.
 Application of limiting factor- limiting factor should be
taken into account in order to analyze the external S & W.
 Adequate information- more quantity of reliable
information leads to effective decision making.
 Considering other views- various views at the same point
are taken into account for quality decision.
 Timeliness- decision should be ,made at proper time to meet
the competitive advantages.
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25. Simple Practical Test On
Decision-Making
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26. Suppose that you are a manager
& running your organization.
Few questions will be asked.
Think & answer the questions
as though you are the manager!
The default choices (to all questions) will be:
a) Not at all b)Rarely c)Sometimes d)Often e)Very often
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27. Ready?
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28. Practice
1. I evaluate the risks associated with each alternative
before making a decision.
2. After I make a decision, it's final – because I know
my process is strong.
3. I try to determine the real issue before starting a
decision-making process.
4. I rely on my own experience to find potential
solutions to a problem.
5. I tend to have a strong "gut instinct" about problems,
and I rely on it in decision-making.
6. I am sometimes surprised by the actual
consequences of my decisions.
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29. Practice
7. I think that involving many stakeholders to generate
solutions can make the process more complicated than it
needs to be.
8. If I have doubts about my decision, I go back and
recheck my assumptions and my process.
9. I take the time needed to choose the best decision-
making tool for each specific decision.
10. I consider a variety of potential solutions before I make
my decision.
11. Before I communicate my decision, I create an
implementation plan.
12. In a group decision-making process, I tend to support
my friends' proposals and try to find ways to make them
work.
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30. Practice
13. I use a well-defined process to structure my
decisions.
14. When communicating my decision, I include my
rationale and justification.
15. Some of the options I've chosen have been much
more difficult to implement than I had expected.
16. I prefer to make decisions on my own, and then let
other people know what I've decided.
17. I determine the factors most important to the
decision, and then use those factors to evaluate my
choices.
18. I emphasize how confident I am in my decision as a
way to gain support for my plans.
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31. How to calculate your score???
Evaluation :
Not at all -1
Rarely -2
Sometimes -3
Often -4
Very Often -5
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32. Check out your score and
comments friends
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33. If your score is between 18-42
• Your decision-making hasn't fully matured. You
aren't objective enough, and you rely too much on
luck, instinct or timing to make reliable decisions.
• Start to improve your decision-making skills by
focusing more on the process that leads to the
decision, rather than on the decision itself. With a
solid process, you can face any decision with
confidence.
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34. If your score is between 43-66
• Your decision-making process is OK. You have a
good understanding of the basics, but now you
need to improve your process and be more
proactive.
• Concentrate on finding lots of options and
discovering as many risks and consequences as
you can. The better your analysis, the better your
decision will be in the long term.
• Focus specifically on the areas where you lost
points, and develop a system that will work for
you across a wide variety of situations.
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35. If your score is between 67-90
• You have an excellent approach to decision-making!
You know how to set up the process and generate
lots of potential solutions.
• From there, you analyze the options carefully, and
you make the best decisions possible based on what
you know.
• As you gain more and more experience, use that
information to evaluate your decisions, and continue
to build on your decision-making success.
• Think about the areas where you lost points, and
decide how you can include those areas in your
process.
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36. Six essential steps in the decision-
making process
• Establishing a positive decision-making
environment.
• Generating potential solutions.
• Evaluating the solutions.
• Deciding.
• Checking the decision.
• Communicating and implementing.
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