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PRINCIPLES OF MANAGEMENT
PROJECT PROJECT OF MANAGERIAL DECISION MAKING SUBMITTED TO SIR AMIR RIAZ GROUP MEMBERS: 1. Muhammad Rizwan Iqbal
2.

Falak Shair

3. Muhammad Zubair Tariq 4. Haroon Mushtaq

5.

Rabia Muneer
MBA (REGULAR) SECTION (H)

UNIVERSITY OF AGRICULTURE, FAISALABAD

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MANAGERIAL DECISION MAKING

DECISION:
According to Stephen Robbins

The process of selecting from several choices products or ideas, and taking action, is called Decision Making.
The selection of a course of action from among alternatives

Decision making is the essence of management and all managers are judged on the basis of outcomes of the decisions which they made.

LEVELS OF MANAGEMENT INVOLVED IN DECISION MAKING:

Managers at all levels are involved in decision making. That is, they make choices. EXAMPLES:

Top Management:
Top Management makes following decisions about their organization Defining Organizational Goals Where to locate Manufacturing facilities? How inter into new markets?

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Middle & Lower managers:

They are involved in following types of decision making Decision about Production schedules Product quality problems Pay Raises Employee Discipline

DECISION MAKING PROCESS

Decision making is a process not just as a simple act of choosing among alternatives but decision making is something straightforward. Effective decision making determines the destiny of an Organizations life. A manager has to take much kind of decisions in an Organization, like How to quit his job to venture into business? How to increase the sales per month? How market can be hold on? And how discipline can be created in an organization?

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STEPS INVOLVED IN DECISION MAKING:

Table 1.1
FLOW CHART DIAGRAM

WHAT IS PROBLEM? Definition:

According to Stephen Robbins A Problem Is an Obstacle that makes achieving a desired goal or purpose difficult.

OR

Page |5 Any question or matter involving doubt, uncertainty, or difficulty is called a problem Following are steps involved in Decision making.

1) Identifying the problem Every Decision starts with a Problem. A problem is a difference between desired and existing state Suppose there is need of new cars for business and for use of Business. Here we have a problem to purchase new car according to our desired condition. 2) Identifying the decision criteria
After identifying a problem the next step is to define the Decision Criteria that are important to resolve problem. For instance the following Decision Criteria is set about cars. Speed in CC Color Model Fuel System ( CNG, Diesel, Patrol ) After Sales Services Reliability

Table 1.2 2) Allocating the weight to criteria If relevant criteria are not equally important the decision maker must wait the items in order to give them priority in the decision. The weighted criteria for our example are given below Speed in CC Color Table 1.3 Model Fuel System ( CNG, Diesel, Patrol) After Sales Services 4. Reliability Development of alternative: 50 10 8 15 5 12

In the fourth step the decision maker lists out available alternative about an item that may resolve a problem. In this step a decision maker needs to be a creative person.

Page |6 A manager may looks for the following alternatives of an item. Following may be the alternatives in examples of cars. Honda Toyota Corolla Suzuki

5). Analysis of alternative

After identification of alternatives the decision maker must evaluate each one. The values are given to alternatives in order to carry out assessment. The alternatives may be analyzed as follows. CARS Honda Suzuki Toyota SPEED (cc) 48 40 55 COLOR MODLE 08 06 08 05 07 07 FUEL SYSTEM 12 09 13 RELIBILITY TOTAL 09 08 10 82 70 93

Table 1.4

6). Selection of an alternative

In the 6th step the best alternative is selected by the highest total in step 5. A manager will prefer to select the Car of Toyota Company because its weighting is 93, the highest than others.

7). Implementing the alternatives

In this step the decision is put into action. In above example of cars the decision will be implemented by purchasing a car of Toyota Company.

8). Evaluating decision effectiveness

This is the last step in decision making process and here the result or outcome of decision is evaluated.

Page |7 In this a manager assesses that either there is a problem or error in the decision which he has taken and then that error is removed by redo another step or the whole process is revised.

Decision making approaches

Teams, team leaders, supervisors and managers often experience strife because of confusion regarding decision-making. A variety of decision-making approaches can be used in different situations. Some main and important approaches are: Ideas or actions intended to deal with a problem or situation

Rational approach
The rational decision making model relies on a number of assumptions, including that the decision maker has complete information, and is able to identify all the relevant options in an unbiased manner, and choose the best option with the highest utility. OR A rational decision making model provides a structured and sequenced approach to decision making. Using such an approach can help to ensure discipline and consistency is built into your decision making process. Rational decision making model consists of a series of steps, beginning with problem/opportunity identification, and ending with actions to be taken on decisions made.

Assumptions of Rationality:
A decision maker or manager would: Be objective and logical.

Page |8 Have a clear and specific goal and identified all viable alternatives. Have carefully define problem. Select alternative that maximizes likelihood of achieving the goal. Make decision in the firm's best economic interests.

Table 1.5 Rational model strengths

The main strength of a rational decision making model is that it provides structure and discipline to the decision making process. It helps ensure we consider the full range of factors relating to a decision, in a logical and comprehensive manner. Decisions are consistent, value maximizing choices within specified constraints. A rational decision making model can help us to make better decisions and thus help us to be better managers.

Rational model criticism

Not all decisions are made on rational basis Most problems, goals and preferences are not clear or well defined

Page |9 Not practical to know all possible alternatives Time and cost constraints exist in all practical problems Result are not maximized in most cases

Bounded rational approach

The concept and associated decision model of bounded rationality was first discussed by Herbert Simon in his celebrated book Models of Man published in 1957 by John Wiley and Sons.

Bounded Rationality:
Behaves rationally within the parameters of a simplified decision Accept solutions that are good enough. making process that is limited by an individuals ability to process information.

Managers, usually because of time constraints, lack of information, and cognitive factors usually make numerous daily decisions and seek to make the best possible decision considering the circumstances, rather than the optimal decision. This also implies that a particular manager faced with the same challenge but at different time may make a different decision at that time.

Table 1.6
Because the human mind cannot formulate and solve complex problems with full rationality, we operate within the confines of bounded rationality. We construct

P a g e | 10 simplified models that extract the essential features from problem without capturing all their complexity. We can then behave rationality within the limits of the simple model Bounded rationality means that people have limits, or boundaries, on how rational they can be. The organization is incredibly complex, and managers have the time and ability to process only a limited amount of information with which to make decision. Because the managers do not have the time or cognitive ability to process complete information about complex decision, they must satisfy. Satisfying means that decision makers choose the first solution alternative that satisfies minimal decision criteria. Rather than pursuing all alternatives to identify the single solution that will maximize economic returns, manager will opt for the first solution that appears to solve the problem, even if better solutions are presumed to exist. The decision maker cannot justify the time and expense of obtaining complete information.

Bounded Rational Assumptions:

Limited set of criteria. Self-interest influences ratings. Limited no. of alternatives. Alternatives are assessed one at a time till a satisfying (or good enough) alternative is found. Politics influences acceptance and commitment of decision.

Example An example of both bounded rationality and satisfying occurs when a manager on a business trip spills coffee on his shirt just before an important meeting. He will run to a

P a g e | 11 nearby clothing store and buys a poorly fitting shirt. Having neither the time nor the opportunity to explore all the shirts in town, he satisfies by choosing a shirt that will solve the immediate problem. Obviously it would be optimal to buy a proper fitting shirt. But if the person is in a hurry and cannot wear a wet, coffee stained shirt, then buying the poorly fitting one is appropriate. This is an example of bounded rationality. In a similar fashion, manager sometimes generate alternatives for complex problems only until they find one they believe will work. Another Example: The concept of bounded rationality can be illustrated by a simple purchasing example: John wishes to buy a new and expensive stereo system. John, in trying to decide on a particular brand consults with a number of friends, relatives as well as trade journals. John decides to purchase Reasonable Stereo. While at the store, the saleswoman, Janet, explains and proves to John that he can do much better with his budget if he goes for Optimal Stereo. Optimal Stereo gives better value for money with respect to cost, performance and fidelity, design, warranties as well as style. John nevertheless, even if he would receive more value for his money with Optimal Stereo, Optimal Stereo being the rational choice, opts for Reasonable Stereo.

Intuitional approach
In the course of a day, you make hundreds of decisions and other problem solutions, usually based on your intuition. These are called by such names as

P a g e | 12 intuitive decisions, instantaneous decisions, gut feelings, leaps of understanding, hunches, and arbitrary guesses, jumping to conclusions, hasty decisions, sixth sense, quick guesses, snap judgments, and other terms.

Table 1.7

Intuition represents a quick apprehension of a decision situation based on past experience, feelings and accumulated judgment but without conscious thought. Intuitive decision making is not arbitrary or irrational, because it is based on years of practice and hands-on experience that enable managers to quickly identify solutions without going

P a g e | 13 through painstaking computations. In todays fast-paced, turbulent business environment, intuition plays an increasingly important role in decision making. A survey of managers found that nearly half of executives say they rely more on intuition than on rational analysis to run their companies. People make good decision using their intuition under extreme time pressure by recognition. When people build a depth of experience and knowledge in a particular area, the right decision often comes quickly and effortlessly as recognition of information that has been largely forgotten by the conscious mind. Good intuitive decision making skills Alexis Carrel (French surgeon, biologist, Nobel Prize in Physiology or Medicine) Said: All great men are gifted with intuition. They know without reasoning or analysis, what they need to know. This is very important to everyone and especially for those in managerial positions. A good intuitive base depends on a great number of decision making skills, such as: Curiosity A good memory Emotional stability Freedom from biases An extensive body of knowledge Ability to distinguish between relevant and irrelevant concepts Good reasoning and analytical ability Creative ability A variety of experience memories & accurate interpretation of them Memory of other peoples experiences and accurate interpretation of them

Example

P a g e | 14 Typical examples where intuition can play an important role in making decisions are: Choosing your life partner. Selecting the right car to buy. Evaluation of a job. Decision about an education. Selecting a meal when eating out. Selecting the next book to read. Decide how to dress for today, and so on. Another Example: Firefighters make decision by recognition what is typical or abnormal about a fire, based on their experience. Similarly, in the business world, managers continuously perceive and process information that they may not consciously be aware of, and their base of knowledge and experience help s make them decisions that may be characterized by uncertainty and ambiguity.

Group decision making

Definition Group decision making is a type of participatory process in which multiple individuals acting collectively, analyze problems or situations, consider and evaluate alternative courses of action, and select from among the alternatives a solution or solutions. Group decision making is a situation faced when people are brought together to solve problems in the anticipation that they are more effective than individuals under the idea of synergy. The number of people involved in group decision-making varies greatly, but often ranges from two to seven. Decision-making groups may be relatively informal in nature,

P a g e | 15 or formally designated and charged with a specific goal. The process used to arrive at decisions may be unstructured or structured. The nature and composition of groups, their size, demographic makeup, structure, and purpose, all affect their functioning to some degree. The external contingencies faced by groups (time pressure and conflicting goals) impact the development and effectiveness of decision-making groups as well. In organizations many decisions of consequence are made after some form of group decision-making process is undertaken. However, groups are not the only form of collective work arrangement. Group decision-making should be distinguished from the concepts of teams, teamwork, and self managed teams. Although the words teams and groups are often used interchangeably, scholars increasingly differentiate between the two. The basis for the distinction seems to be that teams act more collectively and achieve greater synergy of effort. GROUP DECISION MAKING METHODS There are many methods or procedures that can be used by groups. Each is designed to improve the decision-making process in some way. Some of the more common group decision-making methods are Brainstorming Dialectical inquiry

Nominal group technique

Delphi technique

Table 1.8

Brainstorming

P a g e | 16 Brainstorming involves group members verbally suggesting ideas or alternative courses of action. The "brainstorming session" is usually relatively unstructured. The situation at hand is described in as much detail as necessary so that group members have a complete understanding of the issue or problem. The group leader or facilitator then solicits ideas from all members of the group. Usually, the group leader or facilitator will record the ideas presented on a flip chart or marker board. The "generation of alternatives" stage is clearly differentiated from the "alternative evaluation" stage, as group members are not allowed to evaluate suggestions until all ideas have been presented. Once the ideas of the group members have been exhausted, the group members then begin the process of evaluating the utility of the different suggestions presented. Brainstorming is a useful means by which to generate alternatives, but does not offer much in the way of process for the evaluation of alternatives or the selection of a proposed course of action. One of the difficulties with brainstorming is that despite the prohibition against judging ideas until all group members have had their say, some individuals are hesitant to propose ideas because they fear the judgment or ridicule of other group members. In recent years, some decision-making groups have utilized electronic brainstorming, which allows group members to propose alternatives by means of e-mail or another electronic means, such as an online posting board or discussion room. Members could conceivably offer their ideas anonymously, which should increase the likelihood that individuals will offer unique and creative ideas without fear of the harsh judgment of others. Dialectical inquiry Dialectical inquiry is a group decision-making technique that focuses on ensuring full consideration of alternatives. Essentially, it involves dividing the group into opposing sides, which debate the advantages and disadvantages of proposed solutions or decisions. A similar group decision-making method, devils advocacy, requires that one member of the group highlights the potential problems with a proposed decision. Both of these techniques are designed to try and make sure that the group considers all possible ramifications of its decision.

P a g e | 17 Nominal group technique The nominal group technique is a structured decision making process in which group members are required to compose a comprehensive list of their ideas or proposed alternatives in writing. The group members usually record their ideas privately. Once finished, each group member is asked, in turn, to provide one item from their list until all ideas or alternatives have been publicly recorded on a flip chart or marker board. Usually, at this stage of the process verbal exchanges are limited to requests for clarificationno evaluation or criticism of listed ideas is permitted. Once all proposals are listed publicly, the group engages in a discussion of the listed alternatives, which ends in some form of ranking or rating in order of preference. As with brainstorming, the prohibition against criticizing proposals as they are presented is designed to overcome individuals' reluctance to share their ideas. Empirical research conducted on group decision making offers some evidence that the nominal group technique succeeds in generating a greater number of decision alternatives that are of relatively high quality. Delphi technique The Delphi technique is a group decision-making process that can be used by decisionmaking groups when the individual members are in different physical locations. The technique was developed at the Rand Corporation. The individuals in the Delphi "group" are usually selected because of the specific knowledge or expertise of the problem they possess. In the Delphi technique, each group member is asked to independently provide ideas, input, and/or alternative solutions to the decision problem in successive stages. These inputs may be provided in a variety of ways, such as e-mail, fax, or online in a discussion room or electronic bulletin board. After each stage in the process, other group members ask questions and alternatives are ranked or rated in some fashion. After an indefinite number of rounds, the group eventually arrives at a consensus decision on the best course of action.

Types of decisions

P a g e | 18 Manager in different types of organization Business facing different types of problem Decisions as they totally depend upon the nature or kind of Business .As manager can make one of two different types of Decisions.
Programmed decision Non Programmed decision

Now we explain them one by one by different examples Programmed decisions Repetitive decisions that can be solved handle by using routine approaches. It applies on structure problem.
Now we explain the stevedored problem

Structured problems
A clear straight forward familiar and easily defend problems

Example
Breakup of needle of machines it all ready defined problems and can be handled by routine decision we will purchases replacement of old

! Non availability of Raw material in city

Non-programmed decisions

we will purchases if from another city if easily

and clearly problem we can handle if easily

A managers can it solve all problem by using programmed decision. Many time managers feeling unstructured problem that can it be solved by using programmed or routine decision we apply non-programmed decision to solve it

A unique and non recurring decision that required a custom made solution

Custom made solution

P a g e | 19 A solution by himself new which not apply in routine or It apply on non structured problems

Unstructured problems
A problems that if new or unusual and for which information is ambiguous or incomplete Now we explain them with examples ECONOMISE BAD CONDITION Like political instability inflation, pressure groups how we removed these problems to settle Business.

Decision making conditions

When managers making decisions he/she may face there different conditions 1) CERTAINITY 2) RISK 3) UNCERTAINITY Now we explain one by one

1)Certainty
A situation in which a decision maker can make correct or pet decision because the outcomes or known

a) Depositing money at bank or certain percentage of interest here manager know the all
the rate of all the banks and certain about the decision this situation is called certainty.

b)

Decision in joining job at 75000 monthly we can take decision involving job

offering by certain organization.

2) Risk

P a g e | 20 A situation in which the decision makes is able to estimated the like hood of certain outcome Example Run the business of the same nature in the same place or increasing the business like increased the business of the stationary which we already doing 2 addition of one more branch of college in another city on the behalf of goodwill

3) Uncertainties
A situation in which the decision maker has not the certainty or not the reasonable probability estimates available simply the decision maker cannot estimate the out comes Example In a job opportunity you submitted the C.V but you dont know the outcomes Purchase of new car or firstly purchase but you dont know the outcomes of car facilities flexibility consume of CNG petrol

Decision making styles

The person making decision is totally depend upon his or her thinking styles Your thinking styles reflect two things

1 source of information you tend to use

It may be external logic facts figure or internal source of information feelings intuition

2 process to that information

Linear ration logic facts and figure nonlinear intuition insights emotion feelings

Linear thinking styles

P a g e | 21 A decision styles characterizes by persons performance for external data and facts processing that information through rational facts and figure Example In job opportunities you are as employer you taking interview you dont hire the employee at the time interview you get information about employee from external source like past organization about performance characteristics job style after getting information you hire employee this is linear decision making style

Non linear decision style

A decision making style characterize by a person internal source of information feelings intuition past experience and process that through internal feelings judgments based Example

1 at the time of hiring employee you dont took information from outside about person
performance hire without that

2 at the time of purchase of TV you dont get information about TV performance color
result but purchase on intuition feelings basis this in non linear decision making

Biases and errors in decision making

P a g e | 22 Managers make decisions they dont use only the rules and styles discuss before but they often use heuristics to simplify their decision heuristics can be useful because they help to make decision in complex situations. Than what does happen, this lead to the biases and errors in the decision making. What is a bias, the inclination or prejudice for or against one thing or person. So this mean in decision making the biases are the favorable thinking for particular alternative in the mind of decision maker. And the error in the wrong selection in the decision making because of some reason that are discuss below

Table 1.9
Immediate gratification This is the situation when decision maker take some decision to get some immediate benefit or to avoid some punishment at the time Confirmation Because of past good experience or having some confirmation about the any of one alternative among many the decision can be biased Sunk costs when decision maker dont want to take high risk than to avoid the element of risk he may not select the best alternative

P a g e | 23 Anchoring effect First impression is very important thing so the decision may be biased because of first impression that is anchoring effect Availability Due to unavailable information the decision may have error or the decision totally depend on the available information Selective perception Perception mean thinking of a person about particular thing so decision made on the perception not on the information can have error or may be biased Self serving Mean to make decision to provide benefit to his self and to provide benefit to the organization Framing When some particular information are provided specially or highlight some information before the decision maker Randomness All the information are not included in the decision making instead some information are included and decision based on sample of information is biased Hind sight When a person falsely believe on a certain outcome of a decision and made his decision on his false believe Representation Decision based on the representation of the information to the decision maker and if the representation of information in biased than decision will become biased Over confidence Because of over confidence the decision may have any error, the decision maker make decision because of his past experience and his confidence

Overview of managerial decision making

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All the factor describe above have their effect in the decision of any manager and that is shown by the diagram

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Practical study

Introduction of organization
Organization name Organization which we have visited is the Klash (private) limited Address

P a g e | 26 117/J.B. Near Paharang Drainage, Millat Road, Dhanola, Faisalabad Products this organization is a textile firm and deal in garments of men and women normally make shirt for men upper for women they also have their dying unit and die the cloths We have met the HR manager and the assistant manager of human recourse and also meet the production manager and quality control manager

Authority hierarchy

Table 2.1

Than at the end the non managerial staff

Use of different approaches

In the klash private limited most of the manager which we have met fallow the intuitional approach in their decision making but this practise is more in the top manager and less in the lower level of managers They people hardly use rational approach as this approach is difficult to fallow in the real life or you can say in the practical situation as manager often dont have all the data and all information about the all alternative

P a g e | 27 Some low level managers use bounded rational approach but the use of different approach is depend on the situation Example the hiring of employees is the duty of the assistant manager and one of the assistant manager is the senior than other assistant manager as he has 5 year more experience than other use the intuitional decision and highly relay on his experience and skill but the other how is junior than him is make same kind of decision after proper evaluation of the all the alternative On the other hand the top manager thing that they have enough experience to take daily decision about the salary of the non managerial staff and low level managers

Conditions of decision making

There are all three conditions exist in the organization and all the manager try to eliminate the risk and uncertainty condition typically low level of managers In the condition of certainty the managers feel more comfortable but at the risk or the uncertain condition they try to avoid to take any decision to avoid the risk condition they give their authority to their head and leave the decision on their head that is why most of the decision are taken by the top management

Process of decision
we have observed the process for a decision that is to hire a person for human recourse manager assistant first there is the need of the person because of the work load of the office because only four men working at the office than they specified the person ability that they want and give weights to his/her different abilities as a person MBA specialized in human resource and have good communication silks than they gather different information and have many applicant for that post but

P a g e | 28 have not yet take any decision or pick any applicant because when we visited the firm they are taking interviews of the applicant

Structured problems and programme decisions

We have seen some example of structured problems and programmed decision making in Klash private limited Example in the case of reward of the employee for their overtime work manager take decision on the bases of the overtime they have spend in the organization In production department the structured problem is when the cloth is die with dark color or the colour which is not required than their solution is to die that cloth with dark color

Unstructured problems and non programmed decision

When the lot of cloth have the stain of oil or grease this is a unstructured problem and the quality control manager have to tell the specific operation or process to remove that stain form cloth

Group decision
Company arrange many meeting some of the periodic but some are for some special purpose but the organization use only the one technique of group decision making and that is the nominal group technique but some assistant manager also ask to one and other for some decision Some of the meetings are of daily bases some are on weekly, than monthly and annually

Biases in the decision

There are many biases in their decision making even in the matter that they handle daily and the biases exits in the low level of managers as well as in the top managers Low level managers In lower management the biases are the self serving and prefer the relative if they have any situation in which there any friend or relative can be

P a g e | 29 beneficial than they often prefer the people that have some importance for them and may be some other alternative can be more beneficial for the organization They also have a bias of immediate gratification and some time try to get some immediate benefit or to avoid the punishment at the time Top management In top management most common bias is the over confidence on their skills and their experience because they have many years experience in Klash The human resource manager highly relay on his experience and dont even get all information that can be easily available to him for some normal decision in respect of the affect of the decision on the firm Manager also has a point of view that the females are more efficient than male In short low level management dont take many decision and normal to take a decision they depend on the information and numeric data And the top level management normally responsible for more decisions and relay on the experience and skills and the information provided to them by subordinates

P a g e | 30

Short comings OR Gaps In the decision making of the managers of Klash private limited

Authority hierarchy
The authority hierarchy of this organization is good and well to make the good decisions but the existence of deputy managers have no importance the functions of deputy managers and the assistant manager are almost same The assistants of managers and the deputy managers are to help the managers

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Information gathering
The way the all the manager give importance to the step of information gathering is no good in many decision we have observed that the managers dont give proper attention to this step This practice is most common in the top level of management without the information the decision have more chance to be wrong The reason of this is the highly relay on the personal skill and the experience of the managers

Approaches of decision making

Some time the approaches use by the managers is not good according to the situation of the decision as the decision of the hiring the non managerial staff the manager use the intuitional approach as the y relay on the experience so this is the that kind of situation the where according to our point of view this approach is not suitable according to situation and in next chapter the solution of this situation we be suggested

Conditions for decision making

As all the conditions of that three almost exist in every organization and every manager try to minimize the uncertainty and to minimize the risk in any situation The behavior of the manager specially low level management at the uncertainty and in risk is not good they try to leave the decision on their head when they have any situation where risk is involve the assistant managers of human resource dont take decision and try to avoid decision that is big hindrance in the innovation and the improvement in the skills of personnel

Group decision making

The company use only one group decision making technique and that is the brain storming technique In the meetings that are held in the organization on daily bases, weekly, monthly, and annually is followed by the brain storming technique

P a g e | 32 And the number of group decision making is also rare in the organization mostly the decisions are taken by the individuals There is no existence of dialectical technique this is the importance technique in the organization the matter with great importance And this is the new age and the developing all the resources all the big organization use video conferencing that is Delphi technique this is the very important you can say the necessary thing that a organization should have when the important person cannot be present as the spot but in the decision there is the need of that person for decision

Biases
The biases make the decision wrong and make the error in the decisions We have found some biases in the decisions of the managers that are as under Biases of low management and the top management are different so we have make the two heading of 1) In lower management 2) In top management

In lower management
In lower management especially the assistant manager of human resource management has most common are Immediate gratification

P a g e | 33 This is the common bias is that is presence in the lower management the assistant manager to avoid the work load or to finish their work in time they take the decision that make affect the work load and reduce the work load but that decision may not be beneficial for the organization 2nd thing is Self serving They have the attention to serve their self or to support their relative or the friends In the hiring an employee they are keen to hire the person which have some relation with them and may be any other person may be more profitable for organization And also in the firing of person they protect specific person not base on their skills but on their relation with them Sunk cost As we have already describe that the manager are not innovative and try to minimize the risk and not take decision in risky situation so when there is the situation where one alternative is can be very risky the managers avoid that alternative and chose other one

In top management
The biases that top management have is somehow different from the biases of the low level of management and that are Over confidence Because of experience the human resource manager have the bias of the over confidence and thing that the decision made by him always right and he dont give proper attention to the information gathering and dont properly process the information that are provide d to them

Gender discrimination Gender discrimination also is the important bias and while talking to him we have knew his view that male can work more efficiently in the human

P a g e | 34 resource area so he give wrong importance to the male applicant while taking interview for assistant manager on the female applicant

Decision making ratio by all the managers

This is often describe above that the most of the decision are made by the top management the ratio between the top management and the low level of management is not appropriate the lower rank managers are very rigid and are not innovative at all

in short the company have some short coming in the decision making and the suggestion will be made in the next portion but the decision making in Klash private limited is good

P a g e | 35

Suggestion and opinions for the short coming and error in the decision making at Klash (pvt) ltd

There are many good things we have found in that organization an some bad thing always exits with good one but we should always try to eliminate that bad thing here are some measures to remove the errors in the decision making of the manager of Klash

P a g e | 36

All the suggestions and recommendation would be beneficial for the organization and these suggestions are made keep in view that the textile industry always in the need of some innovation as there is great competition in this industry

UN appropriate authority hierarchy

It is describe above that the firm have CEO than director than departmental managers than deputy managers than assistant managers after these supervisor The deputy managers and the assistant manager have same function and are almost of same rank so they cant influence each other but in reality the function of one or the working of assistant manager is disturbed by the deputy manager and vice versa These two different authorities are not good so the organization should remove the deputy manager in their authority and make deputy manager also as the assistant manager The rank of deputy manager may cause the leg puling in the organization that may not good for organization

Proper information collection

Top management does not take interest to collect information in relatively some less important matter but these decisions can cause great impact on the efficiency of the organization so managers should take more interest to collect proper information for every kind of decisions this will increase the efficiency of the firm

Suggestion to assistant manager One of the assistant manager is relatively senior than his other peers so at the time of hiring employee he is more intuitional than others

P a g e | 37 he should try to maximize the decision and use bounded rational approach in his decisions

Try to reduce the fear in decision making There is immense fear in the mind of low level of managers to take any risky decision so they dont take this kind of decision and try to avoid these situation that cause the delay in working and the innovation is the mind of employees top management should give them confidence to take some risky decisions to smoothly run the organizational work Group decision making Company only use one technique they should fallow two points There should be the concept of video conferencing in the organization the absence cause the delay in the decision making in fact organization need a big meeting room equipped with the facilities of video conferencing Dialectical group technique is also a good thing to practice is the important matter top manager should make two groups of for that decision one in the favor of that particular decision and one against in this way the proper evaluation of anything can be made is this way manager can maximize the decision is less time and resources

Remove biases

P a g e | 38 There are different biases in low level of management and in top management that cause the errors in the decision making so there should be some measures to remove the biases Measures to remove biases Following are some measures to remove the biases There should be some proper check and balance on the assistant managers and some time surprise inspection by the boss to avoid the biases in the lower level of management There top management should arrange the some meeting or some learning classes to tell their managers how to evaluate the information and how to maximize the decision at certain situations The biases in the top management can be remove by the self determination of the top management they should try to give proper time to all decisions If they dont have enough time than organization should arrange the person how can reduce the work load from the top management Delegation of powers to low level Top management has more work load of decision so the policies should be made to delegate some power to the low level for the time saving and the innovation and confidence in employees

Table of Contents
Page#

P a g e | 39

Summary Theory
What is decision Decision making process Decision making Approaches Group decision making Types of decisions Decision making conditions Decision making styles Biases and error in decision making

1 1 3 7 15 17 19 20 22 25 26 26 27 27 28 30 31 31 31 32 33 35 36 36 37 38

Practical study
Introduction of organization Authority hierarchy Conditions of decision making Group decision making Biases and error

Short comings OR Gaps

Authority hierarchy Approaches of decision making Conditions for decision making Group decision making Biases

Suggestion and opinions

Un appropriate hierarchy of authority Proper information collection Group decision making Remove biases

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Summary
The topic of our project is the Decision Making and the first thing is the theory of the decision making and we have write the different approaches, process of decision making, group decision making, conditions, styles, types and biases of decision making and to analyze the theory we have visited the Klash private limited (textile firm) and have observed the different practices follow in the organization every firm have some short comings as Klash we have write down that gaps like absence of some group techniques and the biases in the decision making of the managers than at the end the suggestion and recommendation for the organization like to remove the deputy manager and to have the Delphi technique in the decision making to improve their standard of decision making.

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Acknowledgement
In the preparation of our project of the Principle of Management we are very thank full to our kind teacher Sir Amir Riaz for his kind guidance and to the institute of Business Management Sciences to provide us appropriate facility for our project and to give us their reference to visit the any organization and also the Klash private limited and the manager for giving us their precious time and at the end all other person who have any way help us to complete our work

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Decision Making