Question no 1: What is Descion making?
Which factors
influence the descion making process in the organization ?
ANSWER:
INTRODUCTION:
Decisions are the essence of management and active in all the
company’s plans of activities and results. The study of the
decision-making process is getting more and more important
because the effectiveness of the activities taking place in
business depends on the way decisions are largely designed
and implemented.
Decision-Making Process:
Decisions play a special role in the
company’s managemen or we can say that in an
organization. Descion making involves a choice
between alternatives; if there are no
alternatives,then no decisions are required or can be
made. A decision is purposive, to attain some
objective; that is, there is a reason for making it.
Why Decision-making Matters
Decision-making is a truly fascinating science,
incorporating organizational behavior, psychology, sociology,
neurology, strategy, management, philosophy, and logic. The ability to
make effective decisions that are rational, informed, and collaborative
can greatly reduce opportunity costs while building a strong
organizational focus. As a prospective manager, effective decision-
making is a central skill necessary for success. This requires the capacity
to weigh various paths and determine the optimal trajectory of action.
Factor influencing on descion making
process in an organization:
Factors Affecting Decision Making
Decisions are typically made under one of three conditions −
Certainty
Risk and
Uncertainty
These conditions are based on the amount of knowledge the decision
maker has regarding the final outcome of the decision. The manager's
decision depends on a number of factors, like the manager's knowledge,
experience, understanding and intuition.
Certainty
Decisions are made under conditions of certainty when the
manager has enough information to know the outcome of the
decision before it is made.
The manager knows the available alternatives as well as the
conditions and consequences of those actions.
There is little ambiguity and hence relatively low possibility of
making a bad decision.
Risk
Most managerial decisions are made under conditions of risk.
Decisions are taken in risk when the manager has some
information leading to the decision but does not know everything
and is unsure or unaware of the consequences.
Under conditions of risk, the manager may find it helpful to use
probability estimates. This is where the manager’s experience and/or
intelligence is of great help.
Uncertainty
Decisions are made under uncertainty when the probabilities of the
results are unknown.
There is no awareness of all the alternatives and also the
outcomes, even for the known alternatives.
Under such conditions managers need to make certain assumptions
about the situation in order to provide a reasonable framework for
decision making. Intuition, judgment, and experience always play a
major role in the decision making process under conditions of
uncertainty.
The decision-making process involves the following steps −
Define the problem
Identify limiting factors
Develop potential alternatives
Analyze and select the best alternatives
Implement the decision
Define the Problem
The first step in the process of decision making is the recognition or
identification of the problem, and recognizing that a decision needs to
be taken.
It is important to accurately define the problem. Managers can do this
by identifying the problem separately from its symptoms. Studying the
symptoms helps getting closer to the root cause of the problem.
Identify Limiting Factors
In order to choose the best alternative and make a decision every
manager needs to have the ideal resources − information, time,
personnel, equipment, and supplies. But this is an ideal situation and
may not always be possible.
A limiting factor is something that stands in the way of accomplishing a
desired objective.
Develop Potential Alternatives
Recognizing the limiting factor in a given situation makes it possible to
narrow down the search for alternatives and make the best decision
possible with the information, resources, and time available.
Some methods for developing alternatives are −
Brainstorming, where a group works together to generate ideas
and alternative solutions.
Nominal group technique is a method that involves the use of a
highly structured meeting, complete with an agenda, and restricts
discussion or interpersonal communication during the decision-
making process.
Delphi technique where the participants do not meet, but a group
leader uses written questionnaires to conduct the decision making.
Analyze the Alternatives
This is an important stage in the decision-making process and perhaps
the toughest. Managers must identify the merits and demerits of each
alternative and weigh them in light of various situations before making
a final decision.
Evaluating the alternatives can be done in numerous ways. Here are a
few possibilities −
Qualitative and quantitative measurements
Perform a cost‐effectiveness analysis for each alternative
Marginal analysis
Selecting Alternatives
Once the alternatives are analyzed and evaluated, the manager has to
choose the best one. The manager needs to choose the alternative that
gives the most advantage while meeting all the required criteria.
Sometimes the choice is simple with obvious benefits, at times the
optimal solution is a combination of several alternatives. At times when
the best alternative may not be obvious, the manager uses probability
estimates, research and analysis aided by his experience and judgment .
Conclusion:
The effectiveness of a decision can be understood through a
systematic and scientific evaluation system that provides
feedback on how well the decision is being implemented, what
the results have been, and what amendments and adjustments
have been made to get the intended results
