Decision Making Under Certainty Uncert

Topics: Decision making, Nokia, Risk Pages: 18 (691 words) Published: November 18, 2014
Decision Making Under

Certainty, Uncertainty & Risk
Principles of management

• Decision making is the major
responsibility of a manager,
regardless of his or her functional
area or level in the organization
• In any disaster-related program,
the goal should be to provide a
framework for decision makers to
effectively analyze a complex
situation containing numerous
alternatives and possible
consequences and to arrive at the
best possible choice with a
minimum of delay.

Steps in Decision Making

Recognize and define the problem or

Identify and analyze alternative courses of
action, and estimate their effects on the
problem or opportunity.

Choose a preferred course of action.

Implement the preferred course of action.

Evaluate the results and follow up as

Quantitative and Qualitative Factors
in Decision Making
• Quantitative factors provide a numerical basis
for decision making. It reduces decisions to
looking at a monetary value placed on different
• Qualitative factors takes into account those
factors that lead to issues that may influence
the outcome of a decision taken by the
company in long term.

Quantitative and Qualitative Factors
in Decision Making

Quantitative and Qualitative Factors
in Decision Making

Variables in Decision Making
• Decisions are made where there are few
alternatives and all the parameters of the
decision can be clearly identified.
• Many decisions, however, require that a choice
be made between different courses which may
be affected by variables or events beyond a
manager's control.
• For example, the field director of a refugee
relief operation knows that the accuracy of new
arrival forecasts will depend in large measure
upon political events in another country

Decision making is carried out under three
different conditions or sets of variables:
1. Decision Making Under Conditions of
2. Decision Making Under Conditions of
3. Decision Making Under Conditions of

Decision Making Under Conditions
of Certainty
™Certain environments
–Exist when information is sufficient to predict

the results of each alternative in advance of
–Certainty is the ideal problem solving and

decision making environment.

Case study


•In 1967, with the encouragement of the Finnish
government, Nokia merged with Finnish Rubber
Works and Finnish Cable Works to form Nokia
•The oil crisis of 1973 created severe inflationary
pressures and a large trade deficit for Finland
trade and shifted its focus to consumer and
business electronics.
•Nokia's basic industries paper, chemicals,
electricity, and machinery were modernized. The
company also moved into robotics, fiber optics,
and high-grade tissues.

Decision Making Under Conditions
of Risk
™Risk environments
–Exist when decision makers lack complete

certainty regarding the outcomes of various
courses of action, but they can assign
probabilities of occurrence.
–Probabilities can be assigned through objective

statistical procedures or personal intuition.

Case study
•Coca Cola - Closure of Coca Cola from India
during Janta Party Government.

•ONGC - Decrease in success rate of oil

Decision Making Under Conditions
of Uncertainty
™Uncertain environments

– Exist when managers have so little information

that they cannot even assign probabilities to
various alternatives and possible outcomes.
– Uncertainty forces decision makers to rely on
individual and group creativity to succeed in
problem solving.

Case study


•The history of Xerox goes back to 1938.
•In 1960s, Xerox grew by acquiring many
companies, including University Microfilms,
Micro-Systems, Electro-Optical Systems, Basic
Systems and Ginn and Company , Xerox found
itself increasingly vulnerable...
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