Decision Making Process and the Various Types of Decisions (with Examples).

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Described as the though process of selecting a logical choice from the available options, decisions and their making processes are fundamental to effective management. A wrong decision is as essential to the management process as a right decision since the errors provide a learning experience that leads to the making the right decision. Simplified, decision making is a six step process: (1) Identification and diagnosis (2) Generating alternate solutions (3) Evaluating alternatives (4) Choosing the best alternative (5) Implementation (6) Evaluation. 1.Identification and Diagnosis: Whether an opportunity or problem, proper identification and diagnosis is critical to arriving at the desired result. Upon identifying the problem, a neutral analysis of its cause and effect is the best method to arrive at the right information on which to base the decision. E.g. Sales were erratic in the Western market. Ashok concluded it was the new marketing campaign of the competition that was eroding his gains. 2.Generating alternate solutions: Whether right or wrong, each problem always has more than one way by which it can be addressed. At this stage an organisation simply lists all its options available. E.g. To boost sales, Ashok considered a price discount, launching his own marketing campaign and releasing an upgraded version of his product. 3.Evaluating alternatives: The integrity of the short-listed solutions must be evaluated on parameters such as a cost, timelines, real & perceived benefits, organisational capability etc. E.g. A price discount would lead to immediate sale gains but reduced quarterly half yearly profits, the marketing campaign will take three months to create and launch while the product upgrade was not yet market-ready. 4.Choosing the best alternative: The two most common methods are optimising and satisfying. The former waits for the right opportunity in the ideal conditions, even though it may take time. While the latter encourages a compromise by...
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