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DECISION MAKING
EM-III
DECISION MAKING
Decision Making
The nature of management decisions
The decision-making process
Decision-making techniques
Management decisions
Decision making steps are:
Defining problem
Gathering problem related facts
Comparing these with right and wrong criteria based on knowledge and
experience
Taking the best course of action
Management decisions
Main characteristics of management decision making:
Often ill-defined or unpredictable problem; human factor; unlike
scientific laws
Management problems have much wider scope and affect many
people and functions, All of these with varying interests, objectives and
requirements
Information gathering for decision is often hazardous process; info
that vary with time due to market or people, so choosing one become
difficult
Management decisions
Main characteristics of management decision making:
(contd)
Rarely exists a best solutions in management problems;
Yes
Decisio
n
critical
?
No
No
No
Decisio
n
routine
?
Manager
have
sufficient
informatio
n?
Yes
Yes
Delegate
Yes
Involv
e
others
?
No
Involve others
Make decision
Decision-making process
Any decision, good or bad, is better than no decision at all
Nothing can be worse than sitting indecisively on the fence.
Half a decision is much worse than no decision at all
A decision is worthless if it cannot be implemented, actions needed
to carry it out must be the part of the decision and not added later
Differ decision?
Routine or
unique? Cause
or symptom?
Define
problem
Own or team?
Decide on
method for
arriving at
decision
Facts or opinions?
Short or
exhaustive list
Quality
solution
exists?
Extent of
compromise?
Boundary conditions
met?
Easy or difficult?
Commitment
needed
Impact on
others?
Feedbac
k
Time factors?
Identify if a
decision is
needed
Define
alternative
solutions
Select best
solution
Modify based
on
compromise
factors
Build
implementation
factors into
decision
Carry out
decision
Monitor
results
Decision-making techniques
Decision techniques; trees and tables; e.g. table 6.2
Decision-making techniques usually adopt a two-stage process
1.
Determining the method for arriving at a decision; such as whether to
involve others or not
2.
Arriving at a decision
(Company decide condition under which customer grant Credit)
Recommended by an existing
client?
Accept/reject?
Description
AI
AII
CI
The manager discusses the problem individually with others and gets
their input before making decision on his/her own
CII
GII
Description
Case study:
Feeding the line