managerial decision making complete
TRANSCRIPT
-
7/31/2019 Managerial Decision Making Complete
1/42
P a g e | 1
PRINCIPLES OF MANAGEMENT
PROJECT
PROJECT OF
MANAGERIAL DECISION MAKING
SUBMITTED TO
SIR AMIR RIAZ
GROUP MEMBERS:
1. Muhammad Rizwan Iqbal
2. Falak Shair
3. Muhammad Zubair Tariq
4. Haroon Mushtaq
5. Rabia Muneer
MBA (REGULAR)
SECTION (H)
UNIVERSITY OF AGRICULTURE, FAISALABAD
-
7/31/2019 Managerial Decision Making Complete
2/42
P a g e | 2
MANAGERIAL DECISION MAKING
DECISION:
According to Stephen Robbins
The process of selecting from several choices products or ideas,
and taking action, is called Decision Making.
The selection of a course of action from among alternatives
Decision making is the essence of management and all managers are judged on the basis
of outcomes of the decisions which they made.
LEVELS OF MANAGEMENT INVOLVED IN DECISION MAKING:
Managers at all levels are involved in decision making. That is, they make choices.
EXAMPLES:
Top Management:
Top Management makes following decisions about their organization
Defining Organizational Goals
Where to locate Manufacturing facilities?
How inter into new markets?
-
7/31/2019 Managerial Decision Making Complete
3/42
P a g e | 3
Middle & Lower managers:
They are involved in following types of decision makingDecision about
Production schedules
Product quality problems
Pay Raises
Employee Discipline
DECISION MAKING PROCESS
Decision making is a process not just as a simple act of choosing among alternatives but
decision making is something straightforward. Effective decision making determines the
destiny of an Organizations life.
A manager has to take much kind of decisions in an Organization, like
How to quit his job to venture into business?
How to increase the sales per month?
How market can be hold on?
And how discipline can be created in an organization?
-
7/31/2019 Managerial Decision Making Complete
4/42
P a g e | 4
STEPS INVOLVED IN DECISION MAKING:
Table 1.1
FLOW CHART DIAGRAM
WHAT IS PROBLEM?
Definition:
According to Stephen Robbins
A Problem Is an Obstacle that makes achieving a desired goal or purpose
difficult.
OR
-
7/31/2019 Managerial Decision Making Complete
5/42
P a g e | 5
Any question or matter involving doubt, uncertainty, or difficulty is called a problem
Following are steps involved in Decision making.
1) Identifying the problem
Every Decision starts with a Problem.
A problem is a difference between desired and existing state
Suppose there is need of new cars for business and for use of Business. Here
we have a problem to purchase new car according to our desired condition.
2) Identifying the decision criteria
After identifying a problem the next step is to define the Decision Criteria that are
important to resolve problem.For instance the following Decision Criteria is set about cars.
Speed in CC
Color
ModelFuel System ( CNG, Diesel, Patrol )
After Sales Services
Reliability Table 1.2
2) Allocating the weight to criteria
If relevant criteria are not equally important the decision maker must wait
the items in order to give them priority in the decision.
The weighted criteria for our example are given below
Table 1.3
4.
Development of alternative:
In the fourth step the decision maker lists out available alternative about an item that
may resolve a problem. In this step a decision maker needs to be a creative person.
Speed in CC 50
Color 10Model 8Fuel System ( CNG, Diesel, Patrol) 15
After Sales Services 5
Reliability 12
-
7/31/2019 Managerial Decision Making Complete
6/42
P a g e | 6
A manager may looks for the following alternatives of an item. Following may be
the alternatives in examples of cars.
Honda
Toyota Corolla
Suzuki
5). Analysis of alternative
After identification of alternatives the decision maker must evaluate each one. The
values are given to alternatives in order to carry out assessment.
The alternatives may be analyzed as follows.
CARS SPEED
(cc)
COLOR MODLE FUEL
SYSTEM
RELIBILITY TOTAL
Honda 48 08 05 12 09 82
Suzuki 40 06 07 09 08 70
Toyota 55 08 07 13 10 93
Table 1.4
6). Selection of an alternative
In the 6th step the best alternative is selected by the highest total in step 5.
A manager will prefer to select the Car of Toyota Company because its weighting is 93,
the highest than others.
7). Implementing the alternatives
In this step the decision is put into action. In above example of cars the decision will be
implemented by purchasing a car of Toyota Company.
8). Evaluating decision effectiveness
This is the last step in decision making process and here the result or outcome of
decision is evaluated.
-
7/31/2019 Managerial Decision Making Complete
7/42
P a g e | 7
In this a manager assesses that either there is a problem or error in the decision which
he has taken and then that error is removed by redo another step or the whole process is
revised.
Decision making approaches
Teams, team leaders, supervisors and managers
often experience strife because of confusion regarding decision-making.
A variety of decision-making approaches can be used in different situations. Some main
and important approaches are:
Ideas or actions intended to deal with a problem or situation
Rational approach
The rational decision making model relies on a number of
assumptions, including that the decision maker has complete information, and is able to
identify all the relevant options in an unbiased manner, and choose the best option with
the highest utility.
OR
A rational decision making model provides a structured and sequenced approach to
decision making. Using such an approach can help to ensure discipline and consistency
is built into your decision making process.
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.
Assumptions of Rationality:
A decision maker or manager would:
Be objective and logical.
-
7/31/2019 Managerial Decision Making Complete
8/42
P a g e | 8
Have a clear and specific goal and identified all viable alternatives.
Have carefully define problem.
Select alternative that maximizes likelihood of achieving the goal.
Make decision in the firm's best economic interests.
Table 1.5
Rational model strengths
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.
Decisions are consistent, value maximizing choices within specified constraints.
A rational decision making model can help us to make better decisions and thus help us
to be better managers.
Rational model criticism
Not all decisions are made on rational basis
Most problems, goals and preferences are not clear or well defined
-
7/31/2019 Managerial Decision Making Complete
9/42
P a g e | 9
Not practical to know all possible alternatives
Time and cost constraints exist in all practical problems
Result are not maximizedin most cases
Bounded rational approach
The concept and associated decision model of bounded rationality was first discussed by
Herbert Simon in his celebrated book Models of Man published in 1957 by John Wiley
and Sons.
Bounded Rationality:
Behaves rationally within the parameters of a simplified decisionmaking process that is limited by an individuals ability to process information.
Accept solutions that are good enough.
Managers, usually because of time constraints, lack of information, and cognitive factors
usually make numerous daily decisions and seek to make the best possible decision
considering the circumstances, rather than the optimal decision.
This also implies that a particular manager faced with the same challenge but at
different time may make a different decision at that time.
Table 1.6
Because the human mind cannot formulate and solve complex problems with full
rationality, we operate within the confines of bounded rationality. We construct
-
7/31/2019 Managerial Decision Making Complete
10/42
P a g e | 10
simplified models that extract the essential features from problem without capturing all
their complexity. We can then behave rationality within the limits of the simple model
Bounded rationality means that people have limits, or boundaries, on how rational they
can be. The organization is incredibly complex, and managers have the time and ability
to process only a limited amount of information with which to make decision. Because
the managers do not have the time or cognitive ability to process complete information
about complex decision, they must satisfy. Satisfying means that decision makers choose
the first solution alternative that satisfies minimal decision criteria. Rather than
pursuing all alternatives to identify the single solution that will maximize economic
returns, manager will opt for the first solution that appears to solve the problem, even if
better solutions are presumed to exist. The decision maker cannot justify the time andexpense of obtaining complete information.
Bounded Rational Assumptions:
Limited set of criteria.
Self-interest influences ratings.
Limited no. of alternatives.
Alternatives are assessed one at a time till a satisfying (or good enough)
alternative is found.
Politics influences acceptance and commitment of decision.
Example
An example of both bounded rationality and satisfying occurs when a manager on a
business trip spills coffee on his shirt just before an important meeting. He will run to a
-
7/31/2019 Managerial Decision Making Complete
11/42
P a g e | 11
nearby clothing store and buys a poorly fitting shirt. Having neither the time nor the
opportunity to explore all the shirts in town, he satisfies by choosing a shirt that will
solve the immediate problem. Obviously it would be optimal to buy a proper fitting shirt.
But if the person is in a hurry and cannot wear a wet, coffee stained shirt, then buying
the poorly fitting one is appropriate. This is an example of bounded rationality.
In a similar fashion, manager sometimes generate alternatives for complex problems
only until they find one they believe will work.
Another Example:
The concept of bounded rationality can be illustrated by a simple purchasing example:
John wishes to buy a new and expensive stereo system. John, in trying to decide on a
particular brand consults with a number of friends, relatives as well as trade journals.
John decides to purchase Reasonable Stereo. While at the store, the saleswoman,
Janet, explains and proves to John that he can do much better with his budget if he goes
for Optimal Stereo.
Optimal Stereo gives better value for money with respect to cost, performance and
fidelity, design, warranties as well as style.
John nevertheless, even if he would receive more value for his money withOptimal
Stereo, Optimal Stereo being the rational choice, opts for Reasonable Stereo.
Intuitional approach
In the course of a day, you make hundreds of decisions and other
problem solutions, usually based on your intuition. These are called by such names as
-
7/31/2019 Managerial Decision Making Complete
12/42
P a g e | 12
intuitive decisions, instantaneous decisions, gut feelings, leaps of understanding,
hunches, and arbitrary guesses, jumping to conclusions, hasty decisions, sixth sense,
quick guesses, snap judgments, and other terms.
Table 1.7
Intuition represents a quick apprehension of a decision situation based on past
experience, feelings and accumulated judgment but without conscious thought. Intuitive
decision making is not arbitrary or irrational, because it is based on years of practice and
hands-on experience that enable managers to quickly identify solutions without going
-
7/31/2019 Managerial Decision Making Complete
13/42
P a g e | 13
through painstaking computations. In todays fast-paced, turbulent business
environment, intuition plays an increasingly important role in decision making. A
survey of managers found that nearly half of executives say they rely more on intuition
than on rational analysis to run their companies.
People make good decision using their intuition under extreme time pressure by
recognition.
When people build a depth of experience and knowledge in a particular area, the right
decision often comes quickly and effortlessly as recognition of information that has been
largely forgotten by the conscious mind.
Good intuitive decision making skills
Alexis Carrel (French surgeon, biologist,Nobel Prize in Physiology or Medicine) Said:
All great men are gifted with intuition. They know without reasoning or analysis, what
they need to know.
This is very important to everyone and especially for those in managerial positions. A
good intuitive base depends on a great number of decision making skills, such as:
Curiosity
A good memory
Emotional stability
Freedom from biases
An extensive body of knowledge
Ability to distinguish between relevant and irrelevant concepts
Good reasoning and analytical ability
Creative ability
A variety of experience memories & accurate interpretation of them
Memory of other peoples experiences and accurate interpretation of them
Example
-
7/31/2019 Managerial Decision Making Complete
14/42
P a g e | 14
Typical examples where intuition can play an important role in making
decisions are:
Choosing your life partner.
Selecting the right car to buy.
Evaluation of a job.
Decision about an education.
Selecting a meal when eating out.
Selecting the next book to read.
Decide how to dress for today, and so on.
Another Example:
Firefighters make decision by recognition what is typical or abnormal about a fire, based
on their experience.
Similarly, in the business world, managers continuously perceive and process
information that they may not consciously be aware of, and their base of knowledge and
experience help s make them decisions that may be characterized by uncertainty and
ambiguity.
Group decision making
Definition
Group decision making is a type of participatory process in which multiple
individuals acting collectively, analyze problems or situations, consider and evaluate
alternative courses of action, and select from among the alternatives a solution or
solutions.
Group decision making is a situation faced when people are brought together to solve
problems in the anticipation that they are more effective than individuals under the idea
ofsynergy.
The number of people involved in group decision-making varies greatly, but often
ranges from two to seven. Decision-making groups may be relatively informal in nature,
http://en.wikipedia.org/wiki/Synergyhttp://en.wikipedia.org/wiki/Synergy -
7/31/2019 Managerial Decision Making Complete
15/42
P a g e | 15
or formally designated and charged with a specific goal. The process used to arrive at
decisions may be unstructured or structured. The nature and composition of groups,
their size, demographic makeup, structure, and purpose, all affect their functioning to
some degree. The external contingencies faced by groups (time pressure and conflicting
goals) impact the development and effectiveness of decision-making groups as well.
In organizations many decisions of consequence are made after some form of group
decision-making process is undertaken. However, groups are not the only form of
collective work arrangement. Group decision-making should be distinguished from the
concepts of teams, teamwork, and self managed teams. Although the words teams and
groups are often used interchangeably, scholars increasingly differentiate between the
two. The basis for the distinction seems to be that teams act more collectively and
achieve greater synergy of effort.
GROUP DECISION MAKING METHODS
There are many methods or procedures that can be used by groups. Each is designed to
improve the decision-making process in some way. Some of the more common group
decision-making methods are
Brainstorming Dialectical inquiry
Nominal group
technique
Delphi technique
Table 1.8
Brainstorming
-
7/31/2019 Managerial Decision Making Complete
16/42
P a g e | 16
Brainstorming involves group members verbally suggesting ideas or alternative courses
of action. The "brainstorming session" is usually relatively unstructured. The situation at
hand is described in as much detail as necessary so that group members have a complete
understanding of the issue or problem. The group leader or facilitator then solicits ideas
from all members of the group. Usually, the group leader or facilitator will record the
ideas presented on a flip chart or marker board. The "generation of alternatives" stage is
clearly differentiated from the "alternative evaluation" stage, as group members are not
allowed to evaluate suggestions until all ideas have been presented. Once the ideas of the
group members have been exhausted, the group members then begin the process of
evaluating the utility of the different suggestions presented. Brainstorming is a useful
means by which to generate alternatives, but does not offer much in the way of process
for the evaluation of alternatives or the selection of a proposed course of action.
One of the difficulties with brainstorming is that despite the prohibition against judging
ideas until all group members have had their say, some individuals are hesitant to
propose ideas because they fear the judgment or ridicule of other group members. In
recent years, some decision-making groups have utilized electronic brainstorming,
which allows group members to propose alternatives by means of e-mail or another
electronic means, such as an online posting board or discussion room. Members could
conceivably offer their ideas anonymously, which should increase the likelihood that
individuals will offer unique and creative ideas without fear of the harsh judgment of
others.
Dialectical inquiry
Dialectical inquiry is a group decision-making technique that focuses on ensuring full
consideration of alternatives. Essentially, it involves dividing the group into opposing
sides, which debate the advantages and disadvantages of proposed solutions or
decisions. A similar group decision-making method, devils advocacy, requires that one
member of the group highlights the potential problems with a proposed decision. Both
of these techniques are designed to try and make sure that the group considers all
possible ramifications of its decision.
-
7/31/2019 Managerial Decision Making Complete
17/42
P a g e | 17
Nominal group technique
The nominal group technique is a structured decision making process in which group
members are required to compose a comprehensive list of their ideas or proposed
alternatives in writing. The group members usually record their ideas privately. Once
finished, each group member is asked, in turn, to provide one item from their list until
all ideas or alternatives have been publicly recorded on a flip chart or marker board.
Usually, at this stage of the process verbal exchanges are limited to requests for
clarificationno evaluation or criticism of listed ideas is permitted. Once all proposals
are listed publicly, the group engages in a discussion of the listed alternatives, which
ends in some form of ranking or rating in order of preference. As with brainstorming,
the prohibition against criticizing proposals as they are presented is designed to
overcome individuals' reluctance to share their ideas. Empirical research conducted on
group decision making offers some evidence that the nominal group technique succeeds
in generating a greater number of decision alternatives that are of relatively high quality.
Delphi technique
The Delphi technique is a group decision-making process that can be used by decision-
making groups when the individual members are in different physical locations. The
technique was developed at the Rand Corporation. The individuals in the Delphi "group"
are usually selected because of the specific knowledge or expertise of the problem they
possess. In the Delphi technique, each group member is asked to independently provide
ideas, input, and/or alternative solutions to the decision problem in successive stages.
These inputs may be provided in a variety of ways, such as e-mail, fax, or online in a
discussion room or electronic bulletin board. After each stage in the process, other group
members ask questions and alternatives are ranked or rated in some fashion. After an
indefinite number of rounds, the group eventually arrives at a consensus decision on the
best course of action.
Types of decisions
-
7/31/2019 Managerial Decision Making Complete
18/42
P a g e | 18
Manager in different types of organization Business facing different types of problem
Decisions as they totally depend upon the nature or kind of Business .As manager can
make one of two different types of Decisions.
Programmed decision
Non Programmed decision
Now we explain them one by one by different examples
Programmed decisions
Repetitive decisions that can be solved handle by
using routine approaches. It applies on structure problem.
Now we explain the stevedored problem
Structured problems
A clear straight forward familiar and easily defend problems
Example
Breakup of needle of machines it all ready defined problems and can be handled by
routine decision we will purchases replacement of old
! Non availability of Raw material in city we will purchases if from another city if easilyand clearly problem we can handle if easily
Non-programmed decisions
A managers can it solve all problem by using
programmed decision. Many time managers feeling unstructured problem that can it be
solved by using programmed or routine decision we apply non-programmed decision to
solve it
A unique and non recurring decision that required a custom made solution
Custom made solution
-
7/31/2019 Managerial Decision Making Complete
19/42
P a g e | 19
A solution by himself new which not apply in routine or
It apply on non structured problems
Unstructured problems A problems that if new or unusual and for whichinformation is ambiguous or incomplete
Now we explain them with examples
ECONOMISE BAD CONDITION
Like political instability inflation, pressure groups how
we removed these problems to settle Business.
Decision making conditions
When managers making decisions he/she may face there different conditions
1) CERTAINITY
2) RISK
3) UNCERTAINITY
Now we explain one by one
1)Certainty
A situation in which a decision maker can make correct or pet decision
because the outcomes or known
a)Depositing money at bank or certain percentage of interest here manager know the all
the rate of all the banks and certain about the decision this situation is called certainty.
b) Decision in joining job at 75000 monthly we can take decision involving job
offering by certain organization.
2) Risk
-
7/31/2019 Managerial Decision Making Complete
20/42
P a g e | 20
A situation in which the decision makes is able to estimated the like hood of certainoutcome
Example
Run the business of the same nature in the same place or increasing the
business like increased the business of the stationary which we already doing
2 addition of one more branch of college in another city on the behalf of goodwill
3) Uncertainties
A situation in which the decision maker has not the certainty or not
the reasonable probability estimates available simply the decision maker cannot estimate
the out comes
Example
In a job opportunity you submitted the C.V but you dont know the outcomes
Purchase of new car or firstly purchase but you dont know the outcomes of car
facilities flexibility consume of CNG petrol
Decision making stylesThe person making decision is totally depend upon his or her thinking styles
Your thinking styles reflect two things
1 source of information you tend to use
It may be external logic facts figure or
internal source of information feelings intuition
2 process to that information
Linear ration logic facts and figure nonlinearintuition insights emotion feelings
Linear thinking styles
-
7/31/2019 Managerial Decision Making Complete
21/42
P a g e | 21
A decision styles characterizes by persons performance for
external data and facts processing that information through rational facts and figure
Example
In job opportunities you are as employer you taking interview you dont hire
the employee at the time interview you get information about employee from external
source like past organization about performance characteristics job style after getting
information you hire employee this is linear decision making style
Non linear decision style
A decision making style characterize by a person internal
source of information feelings intuition past experience and process that through internal
feelings judgments based
Example
1 at the time of hiring employee you dont took information from outside about personperformance hire without that
2 at the time of purchase of TV you dont get information about TV performance colorresult but purchase on intuition feelings basis this in non linear decision making
Biases and errors in decision making
-
7/31/2019 Managerial Decision Making Complete
22/42
P a g e | 22
Managers make decisions they
dont use only the rules and styles discuss before but they often use heuristics to simplify
their decision heuristics can be useful because they help to make decision in complex
situations. Than what does happen, this lead to the biases and errors in the decision
making.
What is a bias, the inclination or prejudice for or against one thing or person. So this
mean in decision making the biases are the favorable thinking for particular alternative
in the mind of decision maker.
And the error in the wrong selection in the decision making because of some reason that
are discuss below
Table 1.9
Immediate gratification
This is the situation when decision maker take some decision to
get some immediate benefit or to avoid some punishment at the time
Confirmation
Because of past good experience or having some confirmation about the
any of one alternative among many the decision can be biased
Sunk costs
when decision maker dont want to take high risk than to avoid the element of
risk he may not select the best alternative
-
7/31/2019 Managerial Decision Making Complete
23/42
P a g e | 23
Anchoring effect
First impression is very important thing so the decision may be biased
because of first impression that is anchoring effect
Availability
Due to unavailable information the decision may have error or the decision
totally depend on the available information
Selective perception
Perception mean thinking of a person about particular thing so
decision made on the perception not on the information can have error or may be biased
Self serving
Mean to make decision to provide benefit to his self and to provide benefit tothe organization
Framing
When some particular information are provided specially or highlight some
information before the decision maker
Randomness
All the information are not included in the decision making instead some
information are included and decision based on sample of information is biased
Hind sight
When a person falsely believe on a certain outcome of a decision and made
his decision on his false believe
Representation
Decision based on the representation of the information to the decision
maker and if the representation of information in biased than decision will become
biasedOver confidence
Because of over confidence the decision may have any error, the
decision maker make decision because of his past experience and his confidence
Overview of managerial decision making
-
7/31/2019 Managerial Decision Making Complete
24/42
P a g e | 24
All the factor describe
above have their effect in the decision of any manager and that is shown by
the diagram
-
7/31/2019 Managerial Decision Making Complete
25/42
P a g e | 25
Practicalstudy
Introduction of organization
Organization name
Organization which we have visited is the
Klash (private) limited
Address
-
7/31/2019 Managerial Decision Making Complete
26/42
P a g e | 26
117/J.B. Near Paharang Drainage, Millat Road,
Dhanola, Faisalabad
Products
this organization is a textile firm and deal in garments of men and women
normally make
shirt for men
upper for women
they also have their dying unit and die the cloths
We have met the HR manager and the assistant manager of human recourse and also
meet the production manager and quality control manager
Authority hierarchy
Table 2.1
Than at the end the non managerial staff
Use of different approachesIn the klash private limited most of the manager which
we have met fallow the intuitional approach in their decision making but this practise is
more in the top manager and less in the lower level of managers
They people hardly use rational approach as this approach is difficult to fallow in the
real life or you can say in the practical situation as manager often dont have all the data
and all information about the all alternative
-
7/31/2019 Managerial Decision Making Complete
27/42
P a g e | 27
Some low level managers use bounded rational approach but the use of different
approach is depend on the situation
Example
the hiring of employees is the duty of the assistant manager and one of the
assistant manager is the senior than other assistant manager as he has 5 year more
experience than other use the intuitional decision and highly relay on his experience and
skill
but the other how is junior than him is make same kind of decision after proper
evaluation of the all the alternative
On the other hand the top manager thing that they have enough experience to take daily
decision about the salary of the non managerial staff and low level managers
Conditions of decision making
There are all three conditions exist in the
organization and all the manager try to eliminate the risk and uncertainty condition
typically low level of managers
In the condition of certainty the managers feel more comfortable but at the risk or the
uncertain condition they try to avoid to take any decision
to avoid the risk condition they give their authority to their head and leave the decisionon their head
that is why most of the decision are taken by the top management
Process of decision we have observed the process for a decision that is to hire a
person for human recourse manager assistant first there is the need of the person
because of the work load of the office because only four men working at the office than
they specified the person ability that they want and give weights to his/her different
abilities as a person MBA specialized in human resource and have good communication
silks than they gather different information and have many applicant for that post but
-
7/31/2019 Managerial Decision Making Complete
28/42
P a g e | 28
have not yet take any decision or pick any applicant because when we visited the firm
they are taking interviews of the applicant
Structured problems and programme decisions
We have seen some example
of structured problems and programmed decision making in Klash private limited
Example
in the case of reward of the employee for their overtime work manager take
decision on the bases of the overtime they have spend in the organization
In production department the structured problem is when the cloth is die with dark
color or the colour which is not required than their solution is to die that cloth with dark
color
Unstructured problems and non programmed decision
When the lot of cloth
have the stain of oil or grease this is a unstructured problem and the quality control
manager have to tell the specific operation or process to remove that stain form cloth
Group decision
Company arrange many meeting some of the periodic but some are
for some special purpose
but the organization use only the one technique of group decision making and that is the
nominal group technique but some assistant manager also ask to one and other for some
decision
Some of the meetings are of daily bases some are on weekly, than monthly and annually
Biases in the decisionThere are many biases in their decision making even in the
matter that they handle daily and the biases exits in the low level of managers as well as
in the top managers
Low level managers
In lower management the biases are the self serving and prefer
the relative if they have any situation in which there any friend or relative can be
-
7/31/2019 Managerial Decision Making Complete
29/42
P a g e | 29
beneficial than they often prefer the people that have some importance for them and
may be some other alternative can be more beneficial for the organization
They also have a bias of immediate gratification and some time try to get some
immediate benefit or to avoid the punishment at the time
Top management
In top management most common bias is the over confidence on
their skills and their experience because they have many years experience in Klash
The human resource manager highly relay on his experience and dont even get all
information that can be easily available to him for some normal decision in respect of
the affect of the decision on the firm
Manager also has a point of view that the females are more efficient than male
In short low level management dont take many decision and normal to take a decision
they depend on the information and numeric data
And the top level management normally responsible for more decisions and relay on the
experience and skills and the information provided to them by subordinates
-
7/31/2019 Managerial Decision Making Complete
30/42
P a g e | 30
Short comings
OR
Gaps
In the decision making of
the managers of
Klash private limited
Authority hierarchy
The authority hierarchy of this organization is good and well
to make the good decisions but the existence ofdeputy managers have no importance
the functions of deputy managers and the assistant manager are almost same
The assistants of managers and the deputy managers are to help the managers
-
7/31/2019 Managerial Decision Making Complete
31/42
P a g e | 31
Information gathering
The way the all the manager give importance to the step
of information gathering is no good in many decision we have observed that the
managers dont give proper attention to this step
This practice is most common in the top level of management without the information
the decision have more chance to be wrong
The reason of this is the highly relay on the personal skill and the experience of the
managers
Approaches of decision making
Some time the approaches use by the
managers is not good according to the situation of the decision as the decision of the
hiring the non managerial staff the manager use the intuitional approach as the y relay
on the experience so this is the that kind of situation the where according to our point of
view this approach is not suitable according to situation and in next chapter the solution
of this situation we be suggested
Conditions for decision making
As all the conditions of that three almost
exist in every organization and every manager try to minimize the uncertainty and to
minimize the risk in any situation
The behavior of the manager specially low level management at the uncertainty and in
risk is not good they try to leave the decision on their head when they have any situation
where risk is involve the assistant managers of human resource dont take decision and
try to avoid decision that is big hindrance in the innovation and the improvement in the
skills of personnel
Group decision making
The company use only one group decision making
technique and that is the brain storming technique
In the meetings that are held in the organization on daily bases, weekly, monthly, and
annually is followed by the brain storming technique
-
7/31/2019 Managerial Decision Making Complete
32/42
P a g e | 32
And the number of group decision making is also rare in the organization mostly
the decisions are taken by the individuals
There is no existence of dialectical technique this is the importance technique in
the organization the matter with great importance
And this is the new age and the developing all the resources all the big
organization use video conferencing that is Delphi technique this is the very
important you can say the necessary thing that a organization should have when
the important person cannot be present as the spot but in the decision there is the
need of that person for decision
Biases
The biases make the decision wrong and make the error in the decisions
We have found some biases in the decisions of the managers that are as under
Biases of low management and the top management are different so we have make the
two heading of
1) In lower management
2) In top management
In lower management
In lower management especially the assistant manager of
human resource management has most common are
Immediate gratification
-
7/31/2019 Managerial Decision Making Complete
33/42
P a g e | 33
This is the common bias is that is presence in the lower
management the assistant manager to avoid the work load or to finish their work in time
they take the decision that make affect the work load and reduce the work load but that
decision may not be beneficial for the organization 2nd thing is
Self serving
They have the attention to serve their self or to support their relative or the
friends
In the hiring an employee they are keen to hire the person which have some relation
with them and may be any other person may be more profitable for organization
And also in the firing of person they protect specific person not base on their skills but
on their relation with them
Sunk cost As we have already describe that the manager are not innovative and try to
minimize the risk and not take decision in risky situation so when there is the situation
where one alternative is can be very risky the managers avoid that alternative and chose
other one
In top management
The biases that top management have is somehow different
from the biases of the low level of management and that are
Over confidence
Because of experience the human resource manager have the bias of
the over confidence and thing that the decision made by him always right and he dont
give proper attention to the information gathering and dont properly process the
information that are provide d to them
Gender discrimination
Gender discrimination also is the important bias and while
talking to him we have knew his view that male can work more efficiently in the human
-
7/31/2019 Managerial Decision Making Complete
34/42
P a g e | 34
resource area so he give wrong importance to the male applicant while taking interview
for assistant manager on the female applicant
Decision making ratio by all the managers
This is often describe above
that the most of the decision are made by the top management the ratio between the top
management and the low level of management is not appropriate the lower rank
managers are very rigid and are not innovative at all
in short the company have some short coming in the decision making and the
suggestion will be made in the next portion but the decision making in Klash private
limited is good
-
7/31/2019 Managerial Decision Making Complete
35/42
P a g e | 35
Suggestion and
opinions for the
short coming and
error in the
decision making at
Klash (pvt) ltd
There are many good things we have found in that organization an some bad thing
always exits with good one but we should always try to eliminate that bad thing here are
some measures to remove the errors in the decision making of the manager of Klash
-
7/31/2019 Managerial Decision Making Complete
36/42
P a g e | 36
All the suggestions and recommendation would be beneficial for the organization and
these suggestions are made keep in view that the textile industry always in the need of
some innovation as there is great competition in this industry
UN appropriate authority hierarchy
It is describe above that the firm have
CEO than director than departmental managers than deputy managers than assistant
managers after these supervisor
The deputy managers and the assistant manager have same function and are almost of
same rank so they cant influence each other but in reality the function of one or the
working of assistant manager is disturbed by the deputy manager and vice versa
These two different authorities are not good so the organization should remove the
deputy manager in their authority and make deputy manager also as the assistant
manager
The rank of deputy manager may cause the leg puling in the organization that may not
good for organization
Proper information collection
Top management does not take interest to
collect information in relatively some less important matter but these decisions can
cause great impact on the efficiency of the organization so managers should take more
interest to collect proper information for every kind of decisions this will increase the
efficiency of the firm
Suggestion to assistant manager
One of the assistant manager is relatively senior
than his other peers so at the time of hiring employee he is more intuitional than others
-
7/31/2019 Managerial Decision Making Complete
37/42
P a g e | 37
he should try to maximize the decision and use bounded rational approach in his
decisions
Try to reduce the fear in decision making
There is immense fear in the mind of
low level of managers to take any risky decision so they dont take this kind of decision
and try to avoid these situation that cause the delay in working and the innovation is the
mind of employees top management should give them confidence to take some risky
decisions to smoothly run the organizational work
Group decision making Company only use one technique they should fallow
two points
There should be the concept of video conferencing in the organization the
absence cause the delay in the decision making in fact organization need a big
meeting room equipped with the facilities of video conferencing
Dialectical group technique is also a good thing to practice is the important
matter top manager should make two groups of for that decision one in the favor
of that particular decision and one against in this way the proper evaluation of
anything can be made is this way manager can maximize the decision is less time
and resources
Remove biases
-
7/31/2019 Managerial Decision Making Complete
38/42
P a g e | 38
There are different biases in low level of management and in top management
that cause the errors in the decision making so there should be some measures to
remove the biases
Measures to remove biases
Following are some measures to remove the biases
There should be some proper check and balance on the assistant managers and
some time surprise inspection by the boss to avoid the biases in the lower level of
management
There top management should arrange the some meeting or some learning
classes to tell their managers how to evaluate the information and how to
maximize the decision at certain situations
The biases in the top management can be remove by the self determination of the
top management they should try to give proper time to all decisions
If they dont have enough time than organization should arrange the person how
can reduce the work load from the top management
Delegation of powers to low level
Top management has more work load of decisionso the policies should be made to delegate some power to the low level for the time
saving and the innovation and confidence in employees
Table of Contents
Page#
-
7/31/2019 Managerial Decision Making Complete
39/42
P a g e | 39
Summary
Theory
What is decision
Decision making process
Decision making Approaches
Group decision making
Types of decisions
Decision making conditions
Decision making styles
Biases and error in decision making
Practical studyIntroduction of organization
Authority hierarchy
Conditions of decision making
Group decision making
Biases and error
Short comings OR Gaps
Authority hierarchy
Approaches of decision making
Conditions for decision making
Group decision making
Biases
Suggestion and opinions
Un appropriate hierarchy of authority
Proper information collectionGroup decision making
Remove biases
I
1
1371517192022
25262627272830
3131313233
3536
363738
-
7/31/2019 Managerial Decision Making Complete
40/42
P a g e | 40
Summary
The topic of our project is the Decision Making and the first
thing is the theory of the decision making and we have write
the different approaches, process of decision making, group
decision making, conditions, styles, types and biases of
decision making and to analyze the theory we have visited
the Klash private limited (textile firm) and have observed
the different practices follow in the organization every firm
have some short comings as Klash we have write down that
gaps like absence of some group techniques and the biases
in the decision making of the managers than at the end the
suggestion and recommendation for the organization like to
remove the deputy manager and to have the Delphi
technique in the decision making to improve their standard
of decision making.
-
7/31/2019 Managerial Decision Making Complete
41/42
P a g e | 41
Acknowledgement
In the preparation of our project of the Principle of
Management we are very thank full to our kind teacher
Sir Amir Riaz for his kind guidance and to the institute of
Business Management Sciences to provide us appropriate
facility for our project and to give us their reference to visit
the any organization and also the Klash private limited and
the manager for giving us their precious time and at the end
all other person who have any way help us to complete our
work
-
7/31/2019 Managerial Decision Making Complete
42/42
P a g e | 42
Decision Making