Decision Making

Powerful Essays
Managers are frequently referred to as decision makers. Managers make decisions about every aspect of the organisation, including strategy, structure, control systems, responses to the environment and human resources. Decision making is not easy. It is done in the face of constantly changing conditions, unclear information and conflicting points of view.

Types of decisions and problems

A decision is a choice made from available alternatives. Decision making is the process of identifying problems and opportunities and then resolving them. Decision making involves effort both before and after the actual choice.

Programmed and non-programmed decisions
Programmed decisions involve situations that have occurred often enough to enable decision rules to be developed and applied in the future. Once managers formulate decision rules, employees and others can make decisions, thus freeing managers for other tasks. Non-programmed decisions are made in response to situations that: • are unique • are poorly defined • are largely unstructured • have important consequences for the organisation.
Non-programmed decisions often involve strategic planning because uncertainty is great and decisions are complex. Routine decision rules for solving the problem do not exist.

Certainty, risk, uncertainty and ambiguity
Managers try to obtain information about decision alternatives that will reduce decision uncertainty. Every decision situation can be organised on a scale according to the availability of information and the possibility of failure. The four positions on the scale are (see Exhibit A page 272): • Certainty. All the information the decision maker needs is fully available. Few decisions are certain in the real world. Most contain risk or uncertainty. • Risk. A decision has clear-cut objectives and good information available. However, the future outcomes associated with each alternative are subject to chance. • Uncertainty. Managers know which goals

You May Also Find These Documents Helpful

  • Better Essays

    Mgmt 371 Chp 9 Notes

    • 1783 Words
    • 8 Pages

    Non programmed decisions- made in response to situations that are unique, poorly defined and largely unstructured, and have important consequences for the organization…

    • 1783 Words
    • 8 Pages
    Better Essays
  • Satisfactory Essays

    Good decision making is an essential skill for career success generally, and effective leadership particularly. If you can learn to make timely and well-considered decisions, then you can often lead your team to spectacular and well deserved success. However, if you make poor decisions your organization can tumble. Regardless of the size of business you are in whether a large corporation, a small company, or even a home based business effective communication skills are essential for success especially when a decision has to be made. Decision making in management is an important skill and making the right decisions is essential. Every manager should be looking to improve their decision making skills and communication skills. The process of business decision making is of the utmost importance for effective management. Decision making process in management must be informed by expert knowledge and experience in all departments. “The decision-making role in organizations is crucial. If things are going smoothly, there is not much for management to do, but if things go wrong or new opportunities arise, somebody has to decide on hiring and firing workers, investing in new machines or scrapping old ones, marketing new products and dropping old ones, and how to raise the necessary finance.” (Fong, Kwok, 2005) The role of management is to take these decisions, communicate with all the departments in the organization that are involved, and make the right decision. The people who do the managing, this may involve a members of the organizations at different ranks, with subordinates, branch, or assistant managers exercising limited caution, and the managing director as the overall boss of an organization, laying down general outline of policy, all of the people can help to carry out the decisions. They all need to communicate and bring out their point of views before making a decision.…

    • 640 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Bounded Rationality

    • 888 Words
    • 4 Pages

    Depending on the nature and amount of decisions to be made as well as who is present on different occassions, managers are faced with occasions of choice.…

    • 888 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Cmi 5002

    • 3289 Words
    • 14 Pages

    Decision making can take time for some decisions to be made, others will take no time at all as we make them every day, unknown to us, every minute of every day we are making management decisions without knowing it.…

    • 3289 Words
    • 14 Pages
    Powerful Essays
  • Powerful Essays

    This module aims to provide a practical introduction to decision-making concepts and techniques that may be encountered in a variety of business organisations and to the role of managers as central actors in the process. It is intended to engender an appreciation of the complexity of decision making and the impact of risk and uncertainty on managerial decisions. The module will demonstrate how to identify, formulate and apply solutions to common business problems, which often requires a choice between different courses of action. It will also illustrate how spreadsheet packages, like Excel, can be used to model and solve decision problems in an effective way.…

    • 2617 Words
    • 16 Pages
    Powerful Essays
  • Satisfactory Essays

    Before finalizing discussing the question we can point out that in a programmed decision making use of computer technology can be considered very important as all or most of the information required by the decision makers are known for certain or with some degree of uncertainty(Risk) But in the case of non programmed decision use of computer…

    • 336 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Decision making refers to “making choices among alternative courses of action—which may also include inaction”. In order to make a wide range of decisions, individuals throughout organizations use the information they gather. These decisions will then change the course of an organization, as well affect their lives. Making successful decisions is certainly the most important task of a manager and it is often a very difficult one. Success may be defined as “the achievement of something desired, planned, or attempted”. In order a decision to be successful, a company should make sure that they make the best choice by going through the formal steps of the rational decision-making model. The rational decision-making model describes “a series of steps that decision makers should consider if their goal is to maximize the quality of their outcomes”. This is the main difference between a successful and an unsuccessful decision; by not considering these decision-making models, a company’s goal can fail just because they do not go through the necessary steps which are: Identifying the problem, establishing decision criteria, weigh decision criteria, generate alternatives, evaluate the alternatives, choose the best alternative, implement the decision, and evaluate the decision (Steps in the Rational Decision-Making Model).…

    • 594 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Cmt Communications

    • 1136 Words
    • 5 Pages

    The success of any organization is determined by managers being able to plan, set goals, and make decisions. Decision making is the primary function of management and this task should not be taken lightly. Decisions are made to achieve goals and tie them to company actions and outcomes. According to Peter Drucker, "Whatever a manager does, he does through decision-making.” When making a decision, managers must take all alternatives into consideration and although one may not have all the answers, a manager must be able to move forward, sometimes immediately, in order to be successful and effective in their decision making process. According to Trewatha & Newport, "Decision-making involves the selection of a course of action from among two or more possible alternatives in order to arrive at a solution for a given problem." This is a continuous process that requires managers to have specific knowledge, skills and intellectual abilities. Some managers find this task challenging as seen in the case of CMT Telecommunications.…

    • 1136 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    The Anatomy of Decision

    • 531 Words
    • 3 Pages

    • There are some essential characteristics that manager’s share when making a decision; they are usually made with someone else’s money and need to be justified, they build on one another, the outcome is important to other people, and they are also forgettable.…

    • 531 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Decision Making Style

    • 760 Words
    • 4 Pages

    A person has this style if they have a low tolerance for ambiguity and are efficient, rational, and logical in their way of thinking. They focus on the short term and are quick to make decisions, usually resulting in a decision that has been made with minimal information and not carefully analyzing other alternatives. Example: When a manager spots the dirt on the window, and orders the cleaner to clean the window now, that is a directive style decision-making. The cleaner has to follow the instruction, and does not need to ask for clarification.…

    • 760 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    Programmed decisions are used for dealing with recurring problems, whether complex or uncomplicated. If a problem recurs, and if its component elements can be defined, predicted, and analyzed, then it may be a candidate for programmed decision making. For example, decisions about how much inventory of a given product to maintain can involve a great deal of fact-finding and forecasting, but careful analysis of the elements in the problem may yield a series of routine, programmed decisions. For Nike, buying television advertising time is a programmed decision.…

    • 651 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Programmed decision is structured and planned out compared to nonprogrammed decisions. The implications are based on if the decisions are spur of the moment or not.…

    • 278 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Decision Making Approaches

    • 2728 Words
    • 11 Pages

    Davenport, T. H. and J. G. Harris. 2006. Automated decision making comes of age. MIT Sloan Management Review, 48(4): 83-89. Summer.…

    • 2728 Words
    • 11 Pages
    Powerful Essays
  • Good Essays

    A manager, whichever type of organization he/she works in, very often faces situations where he/she has to decide/choose among two or more alternative courses of action. These are called as decision making situations.…

    • 411 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Decision Making

    • 537 Words
    • 3 Pages

    Human performance in decision terms has been the subject of active research from several perspectives.…

    • 537 Words
    • 3 Pages
    Good Essays

Related Topics