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UNIT IIPLANNING- DECISION MAKING

Decision making is the process of selecting the required course of action, from a set of available alternative scenarios, to achieve a desired organizational goal.

A goodmanagershould be capable of performing proper decision making.

Identification of ProblemEvaluating the ProblemSearching for solution alternativesEvaluating the available alternativesChoosing the appropriate alternativeImplementation and Follow upSteps involved in Decision Making:?? =

DHONIRATAN TATAAs a captain decision to be taken on each over.As a chairman decision to be taken on long term process ( investments)Identification of Problem ( Batsman or Bowler or Fielder )Evaluating the Problem ( Bowler ( fast or spin ))Searching for solution alternatives ( Alternative Bowler )Evaluating the available alternatives ( List of Bowler )Choosing the appropriate alternative ( Best out of Them )Implementation and Follow up ( Result of the over )Identification of Problem (Tata nano failure)Evaluating the Problem (Reason for Tata nano failure)Searching for solution alternatives ( How to correct it)Evaluating the available alternatives (Possible replacements )Choosing the appropriate alternative ( Best out of Them )Implementation and Follow up ( New model ready )1. Identification of Problem: It is the first step in the process of decision making. It involves identifying the problem for which solution is to be made.A well defined problem is half solved. An organization may have several problems. Each problem should be identified individually so that a desired course of action can be followed.

This is the second step in decision making. In this process, the problem is completely analyzed and evaluated. Once all the aspects of a problem are evaluated, the manager can proceed to the next step searching alternatives.2. Evaluating the Problem:

Once the problem is completely identified and evaluated, a manager should search for all possible solution alternatives. Solution for a problem can be achieved in several ways. If a manager chooses the first feasible way neglecting other alternatives, course of action may not be effective. Hence solution alternatives should be searched and listed so that the most appropriate alternative can be selected. Also, the search should not be broad. It must be as narrow as possible.3. Searching for Solution Alternatives:

This is the fourth step. Once all alternatives are searched and listed, each of them should be completely evaluated. Evaluation is the process of identifying the positive and negative impacts of an alternative. It helps in choosing the appropriate alternative.4. Evaluating the available alternatives:

It is the process of choosing the optimum alternative i.e., alternative with high positive impact and less negative impact. If evaluation process is done correctly and completely, choosing the appropriate alternative is easy.5. Choosing the appropriate alternative:

Once an alternative is chosen, it must be implemented into the organization.Implementation involves the following processes: Communication about the decision to sub-ordinates Acceptance of the decision by sub-ordinates Time setting and manpower allocation Resource allocation Every decision should be reviewed periodically so that it can be changed according to the circumstances. Decision making is an important process inmanagement. Good decision making always yields good results.6. Implementation and Follow up:

TYPES OF DECISIONSProgrammed decisions:Non-Programmed Decisions

b) Strategic and Tactical Decisions:Strategic DecisionsTactical Decisions

a) Programmed and Non-Programmed Decisions:Programmed decisions:Routine , almost automatic process.

Managers have made decision many times before. There are rules or guidelines to follow. Example : Deciding to reorder office supplies.

Non Programmed decisions:Un Usual Situations that have not been often addressed.

No rules to follow since the decision is new. These decisions are made based on information, and a managers intuition , and judgment.Example : Buying new photo copier machine

Strategic DecisionsProvides Direction to organization by establishing Vision Mission and Long term goalsExample : Building new office

Decision taken in order to implement and support strategic decision.Tactical DecisionsExample : Arranging loans and docs to build new office.

Strategic vs. Tactical StrategicTacticalDirectionImplementationStrategy statement Annual plan BroadSpecific, detailedUnstructuredStructuredLong-termShort-term Difficult to evaluate Easy to evaluateRATIONAL DECISION MAKING MODEL Rational decision makingis a multi-step process formakinglogically sounddecisionsthat aims to follow the orderly path from problem identification through solution.

Most popular type of model.RATIONAL DECISION MAKING MODELThe Six-Step Rational Decision-Making Model1. Define the problem.2. Identify decision criteria3. Weight the criteria4. Generate alternatives5. Rate each alternative on each criterion6. Compute the optimal decision

DECISION MAKING UNDER VARIOUS CONDITIONSCertainty,Uncertainty RiskUNCERTAINTYRISKCERTAINTYDECISION MAKERS FACESLevel of Ambiguity and chances of making bad decisionLowerModerateHigherEND OF DECISION MAKING