MIS AND DECISION MAKING CONCEPTS HERBERT SIMON MODEL OF DECISION MAKING DECISION-MAKING CONCEPT:
A decision is choice out of several alternatives (options) made by the decision maker to achieve some objective s in a given situation. Business decisions are those, which are made in the process of conducting business to achieve its objective in a given environment. Managerial decision-making is a control point for every managerial activity may be planning, organizing, staffing, directing, controlling and communicating. Decision-making is the art of reasoned and judicious choice out of many alternatives. Once decision is taken, it implies commitment of resources. The business managers have to take variety of decision. Some are routine and others are long-term implementation decision. Thus managerial decisions are grouped as: (a) Strategic decision
(b) Tactical decision
(c) Operation decision
1. Strategic Decision: these are known as major decision influence whole or major part of the organization. Such decisions contribute directly to the achievement of common goals of the organization; have long range effect upon the organization. Generally, strategic decision is unstructured and thus, a manager has to apply his business judgment, evaluation and intuition into the definition of the problem. These decisions are based on partial knowledge of the environmental factors which are uncertain and dynamic, therefore such decision are taken at the higher level of management. 2. Tactical Decision: tactical decision relate to the implementation of strategic decisions, directed towards developing divisional plans, structuring workflows, establishing distribution channels, acquisition of resources such as men, materials and money. These decisions are taken at the middle level of management. 3. Operational Decision: operational decisions relate to day-to-day operations of the enterprise having a short-term horizon and are always repeated. These decisions are based on facts regarding the events and do not require much of business judgments. Operational decisions are taken at lower level of management.
The business decision-making is sequential in nature. In business, the decisions are not isolated events. Each of them has a relation to some other decision or situation. The decision may appear as a ‘snap’ decision but it is made only after long chain of developments and a series of related earlier decisions. The decision-making process is a complex process in the higher hierarchy of management. The complexity is the result of many factors such as inter-relationship among the experts of decision-makers, a job responsibility, and a question of feasibility, the codes of morals and ethics and a probable impact on business. The personal values of the decision-maker play a major role in decision-making. A decision otherwise being very sound on the business principle and economically rationality may be rejected on the basis of the personal values, which are defeated if such a decision is implemented. The culture, the discipline and the individual commitment to goals will decide the process and success of the decision. The decision-making process requires creativity, imagination and a deep understanding of human behavior. The process covers over a number of tangible and intangible factors affecting the decision process. It also requires a foresight to predict the post-decision implication and a willingness to face those implications. All decisions solve a ‘problem’ but over a period of time they give rise to a number of other ‘problems’. The need of information system in organization is to support the decision-making process. The managers must be aware of problems before decision can be made. A problem exists when the real situation is different than the expected one. After the problem has been identified, the cause of existence of the problem must be identified and then the solution to the problem has to be found. The...
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