decision making final(2)

8/6/2019 Decision Making Final(2)

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Decision Making


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TAG

Abdul Wahab Farooqui

Muhammad Shahid

Usaman Bashir

Rahid Bashir

Sajid Ali

Muhammad MuazamilQudwai

Muahammad Husnain

Sohail


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Decision-Making

Learning Outline:

Define Decision-Making/Managerial Decision-Making

Types of Problems and Decisions: (Structured/UnstructuredProblems, Programmed/Non-programmed Decisions)

How Decisions Are Made

Decision-Making Conditions

Decision-Making Process


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Decision-Making

The process of selecting from several choices products

or ideas, and taking action.

Or

Decision making is the process of making

a choice between a number ofoptions and committing

to a future course ofactions.


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Managerial Decision-Making

The process by which the managers respond to

opportunities and threats by analyzing options, and

making decisions about goals and course of action.

Decisions in response to opportunities:managers

respond to ways to improve organizational

performance.

Decisions in response to threats: occurs when

managers impacted by adverse events to the

organization.


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Decision-Making

Significance:

A decision is an act requiring judgment that is translatedinto action.

Decision making is much more comprehensive thanproblem solving

Decision making is the one truly distinctive characteristic ofmanagers.

Decisions made by top managers commit the totalorganization toward particular courses of action.

Decisions made by lower levels of management implementthe strategic decisions of top managers in the operating

areas of the organization.


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Types of Problems and Decisions:

Managers encounter different types ofproblems

and use different types of decisions to resolve

them.

Problems can be structured problems or

unstructured problems.

Decisions can be programmed decisions or

non-programmed decisions.


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Types of Problems & Decisions:

Structured problems:

Straightforward, familiar, and easily defined. A repetitive decision that can be handled by a routine approach.

A manager may use a programmed decision. Aprocedure, policy or

rule.

Programmed Decisions: Managers make decisions in response to repetitive and routine

problems.

If a particular situation occurs often, managers will develop a routine

procedure for handling it.


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Types of Problems:

Unstructured problems:

Problems that are new or unusual and for which information isambiguous or incomplete.

These problems are best handled by a non-programmeddecision that is a unique decision that requires a custom-madesolution.

Non-programmed Decisions:

Decisions that have not arisen before or is complex or extremelyimportant.

They are made for novel or unstructured problems.

A creative process.


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Programmed Non-Programmed

Repetitive, Routine Complex, Novel

Business: Processing payroll

vouchersCollege: Processing admission

applications

Hospital: Preparing patient for

surgery

Business: Introducing a new

productCollege: Constructing new

classroom facilities

Hospital: Reacting to regional

disease epidemic

Rules

Standard operating procedures

Policies

Creative problem solving


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Types of Problems, Types ofDecisions and

Level in Organizations

Non-Programmed

Decisions

Programmed

Decisions

Unstructur

ed

Structured Top

Low

er


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How Decisions Are Made:

Managers can make decisions on the basis of rationality, bounded

rationality, or intuition.

Rational decision making: Making choices that are consistent and value-maximizing within specified constraints.

A rational manager would be completelylogical and objective.

The problem is clear and unambiguous.

A single well-defined goal is to be achieved.

All alternatives and consequences are known.

No time or cost constraints exist.

Final choice will maximize payoff.


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How Decisions Are Made:

Bounded rationality:

The managers make decisions rationally but are limited (bounded) by

their ability to process information.

Under bounded rationality, managers make satisficing decisions, in

which they accept solutions that are good enough.

Managers decision making may be strongly influenced by the

organizations culture, internal politics, power considerations.Intuitive decision making:

Managers also regularly use their intuition.

Making decisions on the basis of experience, feelings and

accumulated judgment.


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Decision-Making Styles:

All of us make different decisions based on our decision-

making styles. The four decision-making styles are:

Directive, Analytic , Conceptual, and Behavioral.

1. Directive Style:

Directive style decision-making has low tolerance for

ambiguity and is rational.

The make fast decisions but focused on short run.

Minimal information and assessing few alternatives


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2. Analytic Style:

Analytic style decision-making has high tolerance forambiguity and is rational.

They require more information and consider morealternatives for making a decision.

Much more careful in decision-making.

3. Conceptual Style:

Conceptual style decision-making is characterized by hightolerance for ambiguity and is intuitive in nature.

This kind of decision making is for a long term, andsubjected to changes.


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4. Behavioral Style:

Behavioral style decision-making has low tolerance for

ambiguity and is intuitive.

The manager possesses behavioral style decision-

making will engage in team discussion

He makes decision based on what feels right, and what

will motivate the team members to perform


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Decision-Making Conditions:

Three conditions managers may face as they make decisions.

Certainty:

It is a situation in which a manager can make accurate

decisions because all outcomes are known.

Few managerial decisions are made under the condition of

certainty.


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Decision-Making Conditions:

Risk:

In which the decision maker is able to estimate the likelihood ofcertain outcomes.

The ability to assign outcomes may be the result ofpersonalexperiences or secondary information.

Managers have historical data that let them assign probabilitiesto different alternatives.

Uncertainty:

You are about to make a decision where your are not certainabout the outcomes and cannot even make reasonableprobability estimates.

The choice of alternative is influenced by the limited amount of

information available to the decision maker.


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TheDecision-Making Process:

1. Identifying a problem:

Aproblem is a discrepancy between an existing stateand a desired state of affairs.

In order to identify a problem, a manager should be

able to differentiate the problem from its symptom.2. Diagnosis and Analysis of Causes:

What caused the problem to happen i.e. symptoms.

Factors that lead to the issue.


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3. Developing Alternatives:

It requires decision maker to list viable alternatives thatcould resolve the problem.

No attempt is made to evaluate the alternatives, onlylist them.

4. Analyzing & Selecting Alternatives:

The decision maker must critically analyze each

alternatives. Prioritizing the alternatives, according to their

importance in the decision making process.

Select the best alternative from among those identified

and assessed.


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5. Implementing the alternative:

Step-5 is concerned with putting the decision into action.

The selected alternative is implemented by effectively

communicating the decision to the individuals who would beaffected by it and their commitment to the decision isacquired.

6. Evaluating decision effectiveness:

The last step in the decision-making process involvesevaluating the outcome of the decision to see the problemhad been resolved.

Did the alternative chosen in Step-4 and implemented inStep-6 accomplish the desired result?


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Characteristics:

Long-range organizational objectives.

Best choice from among a set of alternatives. It encourages and guides the gathering of relevant

information and informed opinion.

Decision involves organizational change. Decision requires a commitment of resources.

It is straight forward, reliable, easy to use, and flexible.

Success is measurable through objectives attainment.


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Q& A


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Thank you for your patience

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