DECISION MAKING

1. Decision Making

2. Decision & Decision Making Process
- A choice from two or more alternatives.
- A set of eight steps that include identifying a
problem, selecting an alternative, and
evaluating the decision’s effectiveness

3. Decision Making Process……
 Step 1 – Identifying a problemIdentifying a problem
Problem- A discrepancy between an existing and a
desired state of affairs
 Step 2 – Identification of decision criteriaIdentification of decision criteria
Criteria – That define what’s relevant in a problem

4. Decision Making Process……
 Step 3 – Allocating weights to the criteriaAllocating weights to the criteria
Prioritising
 Step 4 – Developing AlternativesDeveloping Alternatives
List the viable alternatives
 Step 5 – Analysing AlternativesAnalysing Alternatives
Appraising alternative against each criteria established
in steps 2 & 3

5. Decision Making Process……
 Step 6 – Selecting an alternativeSelecting an alternative
Chosing the best alternative from amoung
those considered
 Step 7 – Implementing the AlternativeImplementing the Alternative
Implementing decisions effectively –
Planning – organising - Leading

6. Decision Making Process
 Step 8 – Evaluating Decision
effectiveness
Evaluation by –CONTROL

7. Manager As Decision Maker
 Mangers are frequently called Decision Maker
 Decision Making is synonyms to Management

8. Making Decisions
Rationality – Bounded Rationality - Intuition
 Rational Decision Making
Describes choices that are consistent and
value maximising with in specified constraints.
Assumptions in Rationality :-
. The problem is clear and unambiguous
. A single, well defined goal is to be achieved.
. All alternatives and cosequences are known
. Prefrences are clear constant and stable
. No time or cost constraints exist.

9. Bounded Rationality
 Decision making behaviour is rational, but
limited by an individual’s ability to process
information.
Satisficing – Acceptance of solutions that
are good enough.
Escalation of commitment – An increased
commitment to a previous decision despite
evidence that it may have been wrong

10. Intuition
 Making decisions on the basis of experience,
feelings, and accumulated jugement.
Intuition
Experienced Based
Affect - initiated
Subconscious
Mental processing
Values or ethics
Based
Cognitive - Based

11. Strategic Opportunism
 Focuses on long-term objectives while
being flexiblein dealing with short term
problems

12. Types of Problems & Decisions
 Structured Problems – Programmed
decisions
- Straight forward, familiar and easily defined problems
Programmed decisions
- A repetitive decision that can be handled by a routine
approach
- Procedure
- policy
- Rules

13. Types of Problems & Decisions
 Unstructured Problems – Nonprogrammed
decisions
- Problems that are new or unusual and for which
information is ambiguous or incomplete
- A specific decision crafted for a unique problem

14. Types of Problems & Decisions
 Crisis and Crisis Management
Crisis is an unexpected problem that can lead to a
disaster if not resolved quickly and appropriately.
Crisis Management is preparation for the
management of crisis that threaten an organisation’s
health and well-being.
Crisis Management teams & Plans can be developed to
deal with various contingencies

15. Decision Making Conditions/
Environments
 Certain Environment
A situation offers complete information on possible
action alternatives and their consequences.
 Risk Environment
Lacks complete information but offers probabilities of the
likely out comes for possible action alternatives
 Uncertain Environment
A situation lacks so much information that is difficult to
assign probabilities to the likely out comes of alternatives

16. Decision Making Styles
 Decision making styles differ along two
dimentions:-
1) Way of Thinking
2) Tolerance for Ambiguity of an individual

17. Decision Making Styles
 Directive Style
 Analytic Style
 Conceptual Style
 Behavioural style

18. Decision Making Styles
High
Low
rational Intuitive
Analytic
Concep-
tual
Directive
Behav-
ioral
Tolerance
For
Ambiguity
Way of Thinking