Decision Making

Pankaj Kr. Srivastava

 Organisational Decision making
• “ the process of responding to a problem by
searching for and selecting a solution or course of
action that will create value for organisational
stakeholders”.

• There are basically two kinds of decision that need

to make:
1. Programmed
2. Non Programmed
Types of Problems and Decisions
• Structured problems
1.Involved goals that clear.
2.Are familiar(have occurred before)
3.Are easily and completely defined- information
about the problem is available and complete.

• Programmed decision
1.A repetitive decision the can be handled by a
routine approach.
Types of Problems and Decisions

• Unstructured problems
* Problems that are new or unusual and for
which information is ambiguous or incomplete.
* Problems that will require custom-made
solutions.
• Non-programmed decisions
* Decision that are unique and nonrecurring.
* Decision that generate unique responses.
Types of Programmed Decisions

• Policy

• Procedure

• Rule
 The Decision-Making Process

Implement
Define the Evaluate
the chosen
Problem Alternatives
Alternative

Gather facts and Select the best Follow up and

develop alternative. evaluate the
alternatives. chosen
alternative.
 The Decision-Making Process

• Identify a problem and decision criteria and

allocating weights to the criteria.

• Developing, analyzing, and selecting an

alternative that can resolve the problem.

• Implement the selected alternative.

• Evaluating the decision’s effectiveness.

Steps of Decision Making
Step 1: Identifying the Problem
• Problem
A discrepancy between an existing and desired
state of affairs.
• Characteristics of Problems
A problem becomes a problem when a manager
becomes aware of it.
There is a pressure to solve the problem.
The manager must have the authority, information,
or resources needed to solve the problem.
Step 2: Identify the Decision Criteria

• Decision criteria are factors that are important (

relevant) to resolving the problem.
* Costs that will be incurred (investment
required).
* Risks likely to be encountered ( chance of
failure).
* Outcomes that are desired ( growth of the firm).
 Step 3: Allocating Weights to the
Criteria
• Decision criteria are not of equal
importance:
* Assigning a weight to each item.
* Places the items in the correct priority
order of their importance in the
decision making process.
Step 4: Developing Alternatives
• Identifying viable alternatives.
* Alternatives are listed ( without evaluation) that
can resolve the problem.
Step 5 :Analyzing alternatives
• Appraising each alternative’s strengths and
weaknesses
* An alternative’s appraisal is based on its ability
to resolve the issues identified in step 2 and step
3.
Step 6: selecting the alternative

• Choosing the best alternative

* The alternative with the highest total weight is
chosen.
Step 7: Implementing the Alternative

• Putting the decision to and gaining comment

from those whose will carry out the decision.
Step 8: Evaluating the decision’s
effectiveness

• The soundness of the decision is judged by its

outcomes.
* How effectively was the problem resolved by
outcomes resulting from the chosen
alternatives?
* if the problem was not resolve, what went
wrong?
The decision making process -
Example
Identification of a problem “My sales Reps need new computers!”

Identification of Decision Criteria Memory and Storage, Display Quality,

Better Life,Warranty, Carrying weight
Allocation of weights to criteria Memory and Storage-10, Display
Quality -8, Better Life -6,Warranty -4,
Carrying weight-3
Development of alternatives
Toshiba, HP, Soni Vaio, Qosmio,
Gateway, Apple iBook, Lenovo, Dell
Analyzing of alternatives
Toshiba, HP, Soni Vaio, Qosmio, Gateway,
Apple iBook, Lenovo, Dell
Selection of alternatives

Toshiba, HP, Soni Vaio, Qosmio,

Implementation of alternatives Gateway, Apple iBook, Lenovo, Dell

Evaluation of decision alternatives

“ Toshiba!”
 Techniques for improving decision making

Brainstorming – idea generation for decision making.

Nominal group technique (NGT)- problem outlined,
presentation of solution in written form, discussion
over written solutions, and final decision.

Delphi technique- decision made on the basis of
questionnaire filled by the respondents.

Consensus mapping- decision made on the basis of
the report presented by the representative of each
group after