BASIC MANAGEMENT DECISION MAKING PROCESS
Decision-making isanessentialaspectofmodernmanagement. This isafunction ofmanagement. Main task ofmanagementisareasonabledecision. Decision-making is a process of choosing a solution from available alternatives. The decision-makingisimportantbecauseitdeterminesbothmanagement actionandorganization. Adecisioncanbedefinedas"a choice made between alternative courses of action in a situation of uncertainty" (Business Dictionary).It representsawell-balancedjudgmentandcommitmenttoaction. Management makes decisions about strategy, organization structure, human resources, product or service quality, productivity improvement, performance appraisal, responses to environmental change (Victoria University, Robert Mackenzie, Business Management, Chapter 4 Managerial Decision Making, slide 3). Therefore, itisrightthatthefirstimportant functionofmanagement is tomake decisionson issuesandsituations. Itisacontinuous process. The decisionisachoiceamongalternatives. Decisionsare madeto achievethegoalsadopted in accordancewiththenextaction, so decision-making is considered to be a processby whichacourse of actiondecisionis made. According to PeterDrucker, "Any one manager, hepassedthedecision-makingprocess". Managementhasto make a decisionbefore the actionorpriortothepreparationofaplanfor implementation. Moreover, theabilityofmanagersisoften judgedbythequalityofthedecision. The basic management decision making process include steps which are taken into a logical manner and shown in the graph below:
Decision-making processbeginswhena managertoidentifythe real problem. This step will go through three main actions: scan the environment for changing circumstances, categorize the situation as a problem or non-problem and diagnose the problem’s nature and causes (Victoria University, Business Management Manual Book, Chapter 4 Managerial Decision Making, Page 88). Precise definitionof the problemaffectallsubsequent steps, iftheproblemis determinedincorrectly, all the stepsinthedecision-makingprocesswillbebasedonanincorrectstarting point. One of the waysthata managercanhelp determinesthereal problemin a situationby identifyingissuesseparatelyfromthe symptoms ofit. At this point, scanning stage is involved in the work situation for different circumstances and a manager, therefore, may only be unclearly aware an environmental change could lead to or that a present situation is a problem. For example, in the 1970s, Swiss watchmakers saw inexpensive watches emerge from Japan and Hong Kong (Victoria University, Business Management Manual Book, Chapter 4 Managerial Decision Making, Page 89). The next stage is categorization which tries to understand and verify any inconsistency between the current state and the desired state. As the same case above, in this stage, a discrepancy would have occurred in the 1970s when sales of the relatively expensive Swiss watches fell. The following stage in identifying the problem is diagnosing causes of the current problem. Clearly, this stage needs managers to collect further facts and figures and specifying the nature of problem and its causes, otherwise, success in the remainder of the process is difficult. Continuing identifying the case of Swiss watches, its watchmakers first though cheaper watch were only a fad, but in 1983, conditions worsened and Switzerland’s two largest watchmakers, SSIH and Asuag, were deep in debt. They recognized that cheaper watches from Japan and Hong Kong were a serious threat which makes the banks for SSIH and Asuag called in Zurich based management consultant to help find a solution (Victoria University, Business Management Manual Book, Chapter 4 Managerial Decision Making, Page 89). The next step in the decision-making process is to select an alternative that seems to be most rational for solving the problem. In this step, manager has to follow these four rules. Firstly,...
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