Ans: The ability to make good decisions is the key to successful managerial performance. Managers of profit-seeking firms are faced with a vide range of important decision is the areas of pricing, product choice, cost control, advertising, capital investments, and dividend policy, to name but few. Managers in the not-for-profit and the public sectors are faced with a similarly wide range of decision. Decision making in each of these areas shares several common elements.
1.Establishing or Identifying the Objectives: First, the decision maker must establish or identify the objectives of the organization. The failure to identify organizational objectives correctly can result in the complete rejection of an otherwise well-conceived and well-implemental plan.
2.Defining the Problem: The second step in the decision making process is defining the problem in specific term. The purpose of decision making is to gather information that bears on the goal. If there is a discrepancy between the goal and the actual state, action may be needed. In marketing, for example, the marketing executive may gather information about the company's actual market share and compare it with the desired market share. A difference between the two represents a problem that necessitates a decision. Reliable information is very important in this step. In accurate information can lead to an unnecessary decision when one is required.
3.Identifying the Possible Solutions to the Problems: Next, the decision maker must identify the problem requiring a solution. For example, the manager of a brewing plant in Milwaukee may note that the plants profit margin on sales has been decreasing. Pricing errors, labor force problems, or the use of outdated production equipment could cause this. Once the source or sources of the problem are identified, the manager can move...