EXECUTIVE SUMMARY

This research provides an overview of the integral role decision making plays in the daily

operations of Jamaica Money Market Brokers Limited (JMMB). Firstly, decision making is defined to

provide a clear understanding of this term. This is followed by an assessment of the role and process of

decision making as an activity and the fact that the company cannot make decisions in isolation.

The two types of decision making are then explored rational versus intuitive. Rational decision

making processes consist of a sequence of steps designed to rationally develop a desired solution.

Intuitive decision making is almost the opposite, being more instinctive, subjective and subconscious

in nature. An overview of the two types of conditions that management has to make decisions are

provided. The conditions are an environment of certainty and uncertainty.

The different decision making styles are explored and the style most suited for JMMB is than

identified.

The research goes on to identify the different levels of environment for a given organization

internal versus external. Then to describe the issues of environmental certainty/uncertainty and risk. In

addition, an analysis as to how the degrees of risk and certainty/uncertainty can impact the process of

decision making

A description of the different organizational structure presented, which are a centralized and

decentralized organization structure. An analysis as to how the choice of organizational structure can

impact the process of decision making.

A conclusion is then provided and recommendation as to possible areas that improvement can

be made in the company’s decision making.

TABLE OF CONTENTS

SECTION PAGE

1 INTRODUCTION/BACKGROUND1.0.1 The role and process of decision making as an activity 1.0.2 Examine the fact that decision making cannot be carried on in isolation

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2 DECISION MAKING EXPLORED2.0.1 – Rational decision making versus intuitive decision making2.0.2 – Decision making conditions 2.0.3 – Decision making styles2.0.4 – Analyze how decision making styles in particular can impact the process of decision making

3 THE ORGANIZATIONAL ENVIRONMENT EXPLORED 3.0.1 – Identify the different levels of environment for a given organization internal versus external) 3.0.2 – Describe the issues of environmental certainty/uncertainty and risk 3.0.3 – Analyze how the degrees of risk and certainty/uncertainty can impact the process of decision making

4 THE ORGANIZATIONAL STRUCTURE EXPLORED4.0.1 – Describe a centralized organization structure 4.0.2 - Describe a decentralized organization structure 4.0.3 - Analyze how the choice of organizational structure can impact the process of decision making

5 CONCLUSION

6 RECOMMENDATIONS

APPENDICESI.II.III.IV.

BIBLIOGRAPHY

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1.0 INTRODUCTION/BACKGROUND

This research provides an overview of decision making as well as an analysis of the different

facets of decision making process. In order to adequately present the findings a definition of decision

making is provided as follows:

Decision making may be defined as an outcome of mental processes cognitive process or the

process of thought leading to the selection of a course of action among several alternatives. Every

decision making process produces a final choice or selection.

Decision making is an integral part of any company’s daily operations and in this regard we

have selected Jamaica Money Market (JMMB) to demonstrate the manner in which decision making

assists the company in achieving its objectives.

Types of Decision Making

The following are the most common types of decision making styles that the Board of Directors and

Senior Managers of JMMB will encounter:

Irreversible:

These decisions are permanent. Once taken, they can't be undone. The effects of these decisions tend to

have long term impact on a company’s operations.

Reversible:

Reversible decisions are not final and binding. They can be changed entirely at any point of time. It

allows one to acknowledge mistakes and make corrections.

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Delayed:

Such decisions are put on hold until the decision maker thinks that the right time has come. The wait

might make one miss the right opportunity that can cause some loss, specially in the case of

businesses. However, such decisions give one enough time to collect all information required and to

organize all the factors in the correct way.

Quick Decisions:

These decisions enable one to make maximum of the opportunity available at hand. However, only a

good decision maker can take decisions that are instantaneous as well as correct. In order to be able to

take the right decision within a short span of time, one should also take the long-term results into

consideration.

Experimental:

One of the different types of decision making is the experimental type in which the final decision

cannot be taken until the preliminary results appear and are positive. This approach is used when one is

sure of the final destination but is not convinced of the course to be taken.

Trial and Error:

This approach involves trying out a certain course of action. If the result is positive it is followed

further, if not, then a fresh course is adopted. Such a trail and error method is continued until the

decision maker finally arrives at a course of action that convinces him of success. This allows a

manager to change and adjust his plans until the final commitment is made.

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Conditional:

Conditional decisions allow an individual to keep all his options open. He sticks to one decision so

long as the circumstances remain the same. Once the competitor makes a new move, conditional

decisions allow a person to take up a different course of action.

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1.0.1 THE ROLE AND PROCESS OF DECISION MAKING AS AN ACTIVITY

Decision makings is an activity which involves the managers coming together and thinking through

different alternatives and selecting the best or most beneficial choice.

In selecting the best alternative, one of the tool the company utilizes in its decision making process is

SWOT analysis. Where the company analyses its Strengths, Weaknesses, Opportunities and Threats.

The following diagram depicts the decision making flow in a SWOT analysis:

In its Board meeting, the Board of Directors and Senior Managers by meeting to look at the company’s

Strengths, Weaknesses, Opportunities and Threats would be executing the role of decision making as

an activity as they would be engage in discussions on these four areas and the following would be the

possible outcome from the analysis:

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Company’s Strengths

JMMB Group has established itself as the leading brokerage house in the Caribbean. The Company has

consistently introduced new products and services to investors and empowered its clients – individual,

corporate and institutional.

Regional offices – In 1999, through a successful joint venture establishing Caribbean Money Market

Brokers (CMMB) in Trinidad and Barbados. In 2005, as a means of deliberate business line

diversification in the region, JMMB established a joint venture with Intercommercial Bank Ltd., in

Trinidad and Tobago. JMMB Dominicana opened its doors in 2006 and in October 2007 their newly

formed company was officially called JMMB BDI America with a mandate to actively develop the

Money Market in one of the largest Spanish-speaking Caribbean islands.

Weaknesses

Restriction from expanding due to global recession

Opportunities

Possibility of expanding into other countries where there are Jamaicans residing such as the USA,

Canada and the United Kingdom and to diversify and offer new products

Threats

Competition from larger financial institutions

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1.0.2 DECISION MAKING CANNOT BE CARRIED ON IN ISOLATION

The objective of the company is to make a profit while offering different services to its

customers. To this end, decision making cannot be carried on in isolation. The management team has

to be cognizant of the goal of the entity, which is to make a profit and as such management decisions

are made with a particular profit target in mind. In this regard, the company develops a budget as well

as strategic plan. The budget incorporates projected income and expenditure so that management can

see in advance how profitable the company will be over the next for example five years. The strategic

plan will incorporate the SWOT analysis and steps the company plans to implement to meet is profit

and other targets

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2.0 DECISION MAKING EXPLORED

2.0.1 – Rational decision making versus intuitive decision making

Rational decision making processes consist of a sequence of steps designed to rationally develop a

desired solution. Intuitive decision making is almost the opposite, being more instinctive, subjective

and subconscious in nature.

Rational decision making

Rational decision making is a structured and sequenced approach to decision making. Using such an

approach can help to ensure discipline and consistency is built into JMMB’s decision making process.

As the word rational suggests, this approach brings logic and order to decision making. Rational

decision making model consists of a series of steps, beginning with problem/opportunity identification,

and ending with actions to be taken on decisions made.

A General Rational Decision Making ModelRational decision making processes consist of a sequence of steps designed to rationally develop a

desired solution.

Typically these steps involve:

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Identifying a problem or opportunity

The first step for JMMB is to recognize a problem or to see opportunities that may be worthwhile. A

rational decision making model is best employed when the company has relatively complex decisions

to be made.

Gathering information

The Company need to determine what is relevant and what is not relevant to the decision? What do

you need to know before you can make a decision, or that will help you make the right one?

Analyzing the situation

What alternative courses of action may be available to the company? What different interpretations of

the data may be possible? The Problem Solving Activity uses a set of structured questions to encourage

both broad and deep analysis of your situation or problem.

Developing options

The Company will generate several possible options.

Evaluating alternatives

At this stage management will evaluate for feasibility, acceptability and desirability. To determine

which alternative will best achieve the company’s objectives.

Selecting a preferred alternative

Explore the provisional preferred alternative for future possible adverse consequences. What problems

might it create? What are the risks of making this decision?

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Acting on the decision

Put a plan in place to implement the decision. Have you allocated resources to implement? Is the

decision accepted and supported by colleagues? Are they committed to making the decision work?

Strengths and Weaknesses of the Rational Decision Making Model

The main strength of a rational decision making model is that it provides structure and discipline to the

decision making process. It helps ensure we consider the full range of factors relating to a decision, in

a logical and comprehensive manner. However, we should always remember that whilst the model

indicates what needs to be done, it's often how things are done that characterizes effective decision

making. In many situations decisions have to be made with incomplete and insufficient information.

Judgment, intuition, experience and knowledge all come together when making decisions. It is in these

situations that Intuition Decision Making is utilized.

Intuition Decision Making

As alluded to earlier Intuitive decision making is more instinctive, subjective and subconscious in

nature. One of the principle assumptions of the rational decision making process is that human beings

make rational decisions. However, this is not always the case. There are usually wide ranging factors

which determine the company’s decisions, many of which are not rational. This is especially so when

we remember that management is about dealing with people. In addition, many situations require

decisions to be made with incomplete and/or insufficient information. Often management requires

quick decision making, or judgments made under pressure. It is in this context that a more intuitive

approach often develops. All except the most mechanistic of rational decisions must include some

element of subjective judgment. Our decisions are based on judgments which are affected by a range of

factors including our experiences, values, attitudes, and emotions.

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2.0.2 – Decision making conditions

There are two types of conditions that the company will make decisions within certainty and

uncertainty. Decisions made under certainty or uncertainties are based on management’s feelings and

our experiences.

1. Certainty

We experience certainty about a specific question when we have a feeling of complete belief or

complete confidence in a single answer to the question. Decisions such as deciding on a new carpet

for the office or installing a new piece of equipment or promoting an employee to a supervisory

position are made with a high level of certainty. While there is always some degree of uncertainty

about the eventual outcome of such decisions there is enough clarity about the problem, the situation

and the alternatives to consider the conditions to be certain.

2. Uncertainty

A decision under uncertainty is when there are many unknowns and no possibility of knowing what

could occur in the future to alter the outcome of a decision. We feel uncertainty about a situation

when we can't predict with complete confidence what the outcomes of our actions will be. We

experience uncertainty about a specific question when we can't give a single answer with complete

confidence.

Launching a new product, a major change in marketing strategy or opening your first branch could

be influenced by such factors as the reaction of competitors, new competitors, technological

changes, and changes in customer demand, economic shifts, government legislation and a host of

conditions beyond your control.

These are the type of decisions facing the senior executives of large corporations who must commit

huge resources.

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The small business manager faces, relatively, the same type of conditions which could cause

decisions that result in a disaster from which he or she may not be able to recover.

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2.0.3 – Decision making styles

Authoritative

The authoritative decision making style is useful when the leader possesses all the necessary

information and has the required expertise to make the best decision. He/she makes the decision and

the subordinates are then informed of what the decision is. This style is useful when the leader is the

expert, and when a fast decision is required. The leader takes sole responsibility for the decision.

Depending on the situation, this aspect could actually be listed under both pros and cons! The

authoritative decision making style is least useful when there is expertise available elsewhere that the

leader could call on to make a more effective decision. Nor is it useful if it becomes the only decision

making style used by power driven individuals.

Facilitative

The facilitative decision making style indicates a joint effort between leaders and subordinates, both

providing input to make a shared decision. It is important that subordinate have access to the

information required to make the decision. They should also have some degree of expertise and/or

motivation to ensure the best decision is made. Responsibility for this decision is shared and this

style can actually be very empowering to subordinates, unlike the authoritative decision making style

which can have quite the opposite effect. The facilitative style is useful when the risks of a poor

decision are minimal and the benefits of including the subordinates are significant, such as arranging

timetables, or benefit programs.

Consultative

Consultative decision making is said to occur when the leader asks for advice and opinions from his

subordinates, and makes the decision himself. As in the authoritative decision making style,

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responsibility remains with the leader. If the subordinates have expertise or information that will help

make a more effective decision, a wise leader will ask for it. But unless the subordinates understand

that that's what is occurring, it can lead to upset or disappointment.

 Delegative

Delegative decision making, as the name implies, is when a leader passes responsibility for the

decision making and the decision to one or more subordinates. It may even be all the subordinates.

Again, the pros and cons are determined by the expertise and knowledge of those actually making the

decision. The style obviously comes into its own as the organisation gets larger, and means the leader

does not necessarily have to make all the decisions.

Flexibility

A good leader will move easily between the styles depending on context. It takes quite a degree of

awareness of self, as well as an understanding of the limits of your own expertise, to be flexible in this

way.

The effects

It is said that authoritative decision making gives rise to decisions that get things done. However, the

results are short lived unless there is a sense of legitimacy about the decisions. In other words, the

appropriate relationship exists between the decision maker and the subordinates.

Studies also suggest that authoritative decision making by mothers shows up as higher grade point

averages and less occurrence of risky behaviours in European and American adolescents.

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2.0.4 – Analyze how decision making styles in particular can impact the process of decision making

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3.0 THE ORGANIZATIONAL ENVIRONMENT

3.0.1 – organization’s internal versus external environment levels

reviews-analysis of actual results versus organizational goals or plans ... a particular control

procedure and a given control objective or risk. ... management and the external auditors are required

to identify and test ...

In accounting and auditing, internal control is defined as a process effected by an organization's

structure, work and authority flows, people and management information systems, designed to help the

organization accomplish specific goals or objectives.

Strategic management is the highest of these levels in the sense that it is ... of matching the

organization's internal factors with external environmental circumstances. ... were assessed given

the competitive and regulatory environment. .... the role of strategic management is to identify your

core competencies, ...

3.0.2 – In accounting and auditing, internal control is defined as a process effected by an

organization's structure, work and authority flows, people and management information systems,

designed to help the organization accomplish specific goals or objectives.

3.0.3 – Analyze how the degrees of risk and certainty/uncertainty can impact the process of

decision making

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4.0 THE ORGANIZATIONAL STRUCTURE

4.0.1 – Centralized Organization Structure

Centralization refers to where in the organization decisions are made and which groups have the power

to contribute to the decision-making process. In a centralized organization, what the unit at the top says

determines what the lower units do.

4.0.2 - Decentralized Organization Structure

The traditional structure for many businesses for many years has been one which embodies the type of

bureaucracy defined and advocated by Max Weber. However since the mid to latter half of the 20 th

century there has been a shifting to a less bureaucratic system, a more decentralized organization

structure.

The Decentralized Organizational Structure is one in which there is a devolution or empowerment of

subsections or groups within the organization thus giving them a level of autonomy. The Business

Dictionary web site defined Decentralization as,

The transfer of decision making power and assignment of accountability and responsibility for

results. It is accompanied by delegation of commensurate authority to individuals or units at all

levels of an organization even those far removed from headquarters or other centers of power.

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Here the organization has a small corporate staffing with small units having decision making

authorities. Decisions relating to operations in a subunit are made within that unit. Organizational goals

and policies are taken at the executive level.

Decentralization like any other model will carry its advantages and disadvantages, some found were as

follows,

Advantages Decisions are made closer to the operational level of the work

Increased responsiveness to local circumstances or dynamic external environments

Improved and a more customized level of personal customer service

Support services, such as administration, are more likely to be effective if provided as close as

possible to the activities they are intended for

Provides opportunities for training and development in management

Encouraging effect on the motivation and morale of staff due to the level of autonomy

Self contained and controlled locations

Disadvantages

Higher Operational cost than a centralized model

Can prove difficult to control

Duplication of necessary resources

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Presents problems in coordination

Little or no learning across the locations

4.0.3 Impact of Organizational Structure on Decision Making

The type of structure chosen is generally influenced mainly by the type of product offered, size then by

geographic spread; one of the main problems found in the decision making process was the flow of

information throughout the organization. A centralized model would have a faster conveyance of

information than a decentralized one, if all units are at the same location. For matters closed to the

operational level a decentralized structure would be a wiser choice as this allows for a more speedy

response to any matter that may arise that would affect the work flow. When the need to economize on

various costs including communication, or when it becomes critical to resolve conflicts of interest, a

centralized organizational structure would be best.

Decentralization allows the organization to divide labour by sharing decision making across the

organization, it also allows managers to utilize their expertise and experience to improve their sections

or departments. A centralized design has a predictable internal environment, and a clear or uniform line

of command.

In most cases it is more practical to adopt a combined or contingency type structure. In this design

different types of decisions are taken by different structures within the structure chosen for the entire

organization. An example of this is the Dallas Cowboys of the 90s had their owner Jerry Jones giving

the final word on any and every decision. Their competitor, the New England Patriots, on the other

hand, was taking inputs from various individuals throughout the organization. The feeling of trust and

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belonging demonstrated by the club allowed them to take advantage of the division of labour, of

people providing appropriate and accurate analysis on players. The success enjoyed by the Patriots is

such that the Dallas Cowboys have since adopted a similar decentralized structure.

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5.0 CONCLUSION

From the foregoing it can be concluded that decision making is an integral factor in the daily

operations of JMMB. It was also observe that a participative decision making style is most suited for

the company.

.

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6.0 RECOMMENDATIONS

It is recommended that the company continue to use a participative decision making process

and continue to do in-depth SWOT analysis in an effort to ensure that all is strengths, weaknesses,

opportunities and threats are identified prior to making strategic decisions’ so that the company can

make the best choices given the alternatives.

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REFERENCES

http://managementhelp.org/prsn_prd/prb_bsc.htm

http://www.time-management-guide.com/decision-making-skills.html

http://the-happy-manager.com

http://adamp.com/management/centralization-vs-decentralization/

http://www.businessdictionary.com/definition/decentralization.html

http://dictionary.bnet.com/definition/organization+structure.html

cct370-w07.wikispaces.com/Definition

www.unizg.hr/tempusprojects/glossary.htm

http://en.wikipedia.org/wiki/Organizational_structure

Mullins, L.J., Management and Organizational Behaviour: Seventh Edition.

Malone T. W., The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style, and Your Life, Harvard Business School Press, 2004

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