Process of generating & evaluating alternatives and making choices among them. Logical sequence of activities act as a intellectual activity It is directed at solving problems , involve some commitment of resources it is an action commitment Decision are the means rather than ends . it aims at bringing about a resolution of conflicts. It is a human and social process it is an art as well as science. Core of planning and includes forecasting, an integral part of managerial process.

1. UNIT 2
Planning process and
Techniques of decision
making

2. Decision making
• Process of generating & evaluating alternatives and
making choices among them.
• Logical sequence of activities act as a intellectual activity
• It is directed at solving problems , involve some
commitment of resources it is an action commitment
• Decision are the means rather than ends . it aims at
bringing about a resolution of conflicts.
• It is a human and social process it is an art as well as
science.
• Core of planning and includes forecasting, an integral part
of managerial process.

3. Techniques of decision making
•Quantitative
•Non quantitative
•Modern technique

4. A. Quantitative
• It includes mathematical and statistical models, facts ,
financial & economic techniques and experiments.
• Facts – it is very useful in decision making to make sound
decision we have to carefully analyzed, classified and
diagnosed the facts .facts also assure logicalness &
consistency
• Statistical tool – methods such as probability sampling
techniques and hypothesis are important tools for making
decision .
• Mathematical model - it helps in integrating the
information and network. Establish a frame work in which
decisions can be evaluated. Generally constructed to
represent the system being studied, it allows testing of
problem without much cost.

5. • Experimentation - it can be used in the selection of best
alternative. Through tests , decision hypothesis or choice
for alternative can be confirmed or supported . it is not too
costly and some instances are there where limited testing
are advisable.
• Financial & economic techniques – various economic
theories such as marginal analysis , cost effectiveness &
opportunity cost analysis have proved for greater use to
decision making . Financial technique such as ratio, profit
analysis rate of return on invested capital & cash flow are
serve as a mean of evaluation and selection of
alternative.

6. B. Non quantitative
• It includes experience , intuition, judgment, principles of
management , behavioral techniques, groups, institutional
documents and procedures.
• Experience – is the best teacher applies to decision
making . Knowledge based on past experience is helpful
in guide for future course of action .
• Intuition – related to inner feeling or feel for the situation ,
gut feeling, inferences, influences and preferences and
psychological make up of the decision maker.
• Judgment – it is the result of the interaction of knowledge
, ideas , opinions, judgment is based on experience it may
fast and inexpensive to make.

7. • Principles of management – Principles of management
propounded by various thinks can also be used as
guidelines to make sound decisions. Hutchinson has said
that “Principles of management have limited value as a
decision making techniques, but they may help to shape
the environment in which decisions are made.”
• Behavioral technique – : Behavioral techniques have
been developed for gaining insight into decision process.
They rely on the synergistic effect of human interaction
among individuals.
• Groups - many managers rely upon considered opinions
of groups in their decision making. An interacting group
can make more effective decisions than an individual.
Several people can gather more information, can provide
a variety of perspectives on the problem, and are more
likely to be committed than a single person.

8. • INSTITUTIONAL DOCUMENTS AND PROCEDURES:
Certain documents such as policies, rules or procedures
are also used as tools for making decisions. In most
organizations, programmed decisions are handled
through rules, standard operating procedures, and
policies.

9. C. MODERN TECHNIQUES OF
DECISION MAKING
• 1. RISK ANALYSIS: It is important to know the size and nature of the risk in choosing a
course of action. Many traditional tools as are merely estimates and are based upon
probabilities. In fact, every decision is based on the interaction of a number of critical
variables. Risk analysis theory develops for every critical variable in a decision problem.
• 2.DECISION TREES: Decision tree approach exhibits, in the form of a “tree” the decision
point, chance events, and probabilities involved in various courses of action that might be
adopted. The tree shoes in what direction the chance events are and what their values in
terms of profits and losses are for each alternative. Koontz and Weihrich state that “Decision
trees replace broad judgments with a focus on the important elements in a decision, bring out
into the open premises that are hidden, and disclose the reasoning process by which
decisions are made under uncertainty.”
• 3.PREFERENCE THEORY: This theory is based on premise that individual attitudes
towards risk always vary. Hence, decision should be made only after assessing a person’s
willingness to take risks in a variety of situations and by developing an individual preference
curve for that person.
• 4.EXPECTED VALIUE AND PAY-OFF MATRIX: Managers also make use of the expected
value concepts and pay-off matrix in arriving at objective and rational decisions.

10. Planning in an organization
• Deciding in advance about a future course of action
• Process through which managers determine goals ways
of accomplishing them.
• Selecting missions, objectives and actions to achieve
them.
• It bridges the gap from where we are to where we want to
go .
• It is a set policies, procedure and methods used by
managers to achieve their set goals

11. Steps in Planning Process
1. BEING AWARE OF OPPORTUNITY: During this stage, managers create a foundation from which they
will develop their plans. They analyze current state and have a preliminary look at possible future
opportunities. They examine organization's strengths and weakness. Managers need to determine (a) what
threats to achieving the unit’s objective are developing, and (b)how changes in the environment present
opportunities for greater achievement of those objectives.
2. ESTABLISHING OBJECTIVES: The second step in the planning process is to establish objectives for the
entire organization and then for each subordinate work unit. Objectives define the results to be achieved and
indicate where the primary emphasis is to be placed and what is be accomplished by the network of
strategies, policies, procedures, rules, budgets, and programmed.
3..DEVELOPING PROCESS: Premises are planning assumptions about the environment in which the plan is
to be carried out. Premises encompass the expected environment of plans in operation. Important premises
include (a) forecasts, (b) basic policies, and (c) existing company plans. Managers use these premises to
evaluate future events, and develop ‘action statements’ and alternative courses of action.
• The process of forecasting generally involves (i) calculation of probable future events; (ii) analyzing
changes in consumer attitude, technology, competitive forces, government policies etc. and (iii) developing
the basis for decisions and planning through systematic investigations.

12. • 4.DETERMINING ALTERNATIVE COURSES: The next step is to
determine available alternative ways of achieving objectives. KOONTZ
and O’Donnell state. “There is seldom a plan made for which reasonable
alternatives do not exist.” Therefore, managers should search for and
examine alternative courses of action. Alternatives can be discovered
through research, experimentation, and experience.
• 5.EVALUATING ALTERNTIVE COURSES: Analysis of their strong and
weak points, the planner must evaluate the alternatives in the light of
premises and goals. Evaluation is not an easy process because
alternatives have so many variables and limitations. Some alternatives
can be seen through; some may appear to be the most profitable and will
be too expensive. Some may be less desirable or efficient than others;
still another may better suit the firm’s immediate goals.
• Hence, the effective manager evaluates these alternatives against the
considerations for both feasibility and consequences. The statistical
methods and computers have greatly helped the evaluation process.
• 6.SELECTING THE BEST ALTERNATIVE: This is the point at which the
plan is adopted – the point of decision making. Selecting the most
appropriate alternative involves choosing the plan. Normally, managers
will select the alternative that, in their judgment, will best enable the firm
to accomplish its goals.

13. 7. FORMULATING DERIVATIVES PLANS: After the overall plan has been adopted, it is
necessary to develop other derived plans for each segment of the enterprise to support
the major plan. A derivative plan may be necessary:
• To co-ordinate the different phases of the organisation;
• To develop new policies and procedures for effecting the plan; and
• To work along with the major plan to reach the same objective.
8. IMPLEMENTING THE PLAN: The plan becomes a reality when it is put into operation.
This involves converting it into action. Implementation means that resources are
committed and employees act. It requires the use of other management functions, such
as organizing, staffing, directing, and controlling. To get co-operation in implementation,
subordinates should be associated in the planning process.
• Effective implementation of a plan requires managerial co-ordination and teamwork.
9. FOLLOW UP OF PLAN: Managers must monitor and maintain their plans. Constant
monitoring of plans is necessary so that adjustments and corrections can be made in a
timely and relevant manner.
• Through monitoring function, managers can take corrective action if they observe
unexpected and unwanted deviations. Follow up or feedback mechanism is an attempt
to determine whether the plan has achieved the desired results. Plans should be
compared with actual results. Feedback provides managers with input that can help
them to update and adjust plan accordingly.

14. • THANK YOU