This document discusses effective decision making. It outlines three elements involved in making effective decisions: conditions of certainty, risk, and uncertainty. It then explains the importance of each of the 7 steps in decision making: 1) identifying opportunities and problems, 2) identifying objectives, 3) generating alternatives, 4) evaluating alternatives, 5) reaching decisions, 6) choosing implementation strategies, and 7) monitoring and evaluating. Finally, it discusses the rational economic model and behavioral decision model approaches to decision making, noting that the behavioral model may be more practical and realistic for managers since it acknowledges human limitations compared to the rational economic model.

1. MGT420 : PRINCIPLE & PRACTICES OF
MANAGEMENTS
CHAPTER 4
EFFECTIVE DECISION MAKING
MUNAZAH BINTI MAT YASIN
SITI ZAWANI BINTI JAMALUDDIN
DILYA ALEESHA BINTI ASMADI
SITI FARHANAH BINTI MOHD FAIZUL
NUR IZATUL ADILA BINTI JA’AFAR
SALBIAH BINTI MOHAMAD SAID
2017619016
2017832922
2017607776
2017284722
2017407626
2017444274

2. QUESTION 1 : Discuss three (3) elements involved
in making an effective decision.
Conditions under certainty
• Knows exactly what the outcome will be as resources,
time available and other factors are known
Conditions under risk
• Future conditions are not always known in advance
Conditions under uncertainty
• Cannot even assign subjective probabilities to each of the
possible states of nature

3. QUESTION 2 : What is the importance EACH of
the 7's steps in making decisions

4. Step 1: Identifying Opportunities and Diagnosing
Problems
The clear identification of
opportunities or the diagnosis of
problems that require a decision.
An assessment of opportunities and
problems will only be as accurate as
the information on which it is based

5. Step 2: Identifying Objectives
The quantity and quality of the desired results
should be specified, for these aspects will
ultimately guide the decision maker in
selecting the appropriate course of action
An assessment of opportunities and problems
will only be as accurate as the information on
which it is based

6. Step 3 : Generating Alternatives
Once an opportunity has been identified or
a problem diagnosed correctly, a manager
develops various ways to solve the problem
and achieve objectives.
The alternatives can be standard and
obvious as well as innovative and unique.

7. Step 4 : Evaluating Alternatives
Determining the value or adequacy of
the alternatives generated.
Predetermined decision criteria may be used
in the evaluation process
-Quality desired
-Anticipated costs
-Benefits
-Uncertainties
-Risks

8. Step 5: Reaching Decisions
Decision making is commonly
associated with making a final choice
Although choosing aMn alternative
would seem to be a straightforward
proposition, in reality the choice is rarely
clear-cut

9. The bridge between reaching a decision
and evaluating the results
The keys to effective implementation are:
- Sensitivity to those who will be affected by the
decision.
- Proper planning and consideration of the
resources necessary to carry out the decision.
Step 6 : Choosing Implementation Strategies

10. Step 7 : MONITORING AND EVALUATING
No decision making process is complete
until the impact of the decision has been
evaluated.
Manager must observe the impact of the
decision as objectively as possible and
take further corrective action if it
becomes necessary.

11. QUESTION 3 : Which one is the best approaches, rationa
economic model or behavioral decision
model ?
• It states how a manager should behave in the process of
decision making.
• Besides rational, is also idealistic because it cannot be fully
applied to a practical situation and it is supported by scientific
and logical methods.
Rational
Economic Model
• May not always be applicable in practical situations
• It is pragmatic and holds the view that a manager is a human
being and cannot be fully rational because he is confronted with
many constraints, problems, limitations and inadequacies
Behavioral Decision
Model

12. END OF
PRESENTATION
Q & A