Data that (1) has been verified to be accurate and timely, (2) is specific and organized for a purpose,

(3) is presented within a context that gives it meaning and relevance, and (4) that can lead to an increase in understanding and decrease in uncertainty. The value of information lies solely in its ability to affect a behavior, decision, or outcome. A piece of information is considered valueless if, after receiving it, things remain unchanged. For a technical definition of information see information theory

The need for a decision arises in business because a manager is faced with a problem and alternative courses of action are available. In deciding which option to choose he will need all the information which is relevant to his decision; and he must have some criterion on the basis of which he can choose the best alternative. Some of the factors affecting the decision may not be expressed in monetary value. Hence, the manager will have to make 'qualitative' judgements, e.g. in deciding which of two personnel should be promoted to a managerial position. A 'quantitative' decision, on the other hand, is possible when the various factors, and relationships between them, are measurable. This chapter will concentrate on quantitative decisions based on data expressed in monetary value and relating to costs and revenues as measured by the management accountant. The thought process of selecting a logical choice from the available options. When trying to make a good decision, a person must weight the positives and negatives of each option, and consider all the alternatives. For effective decision making, a person must be able to forecast the outcome of each option as well, and based on all these items, determine which option is the best for that particular situation.

TYPES OF DECISIONS: PROGRAMMED DECISIONS: Programmed decisions are routine and repetitive, and the organization typically develops specific ways to handle them. A programmed decision might involve determining how products will be arranged on the shelves of a supermarket. For this kind of routine, repetitive problem, standard arrangement decisions are typically made according to established management guidelines. NON PROGRAMMED DECISIONS:

Non programmed decisions are typically one shot decisions that are usually less structured than programmed decision.

TYPES OF DECISIONS: PROGRAMMED DECISIONS: Programmed decisions are routine and repetitive, and the organization typically develops specific ways to handle them. A programmed decision might involve determining how products will be arranged on the shelves of a supermarket. For this kind of routine, repetitive problem, standard arrangement decisions are typically made according to established management guidelines. NON PROGRAMMED DECISIONS: Non programmed decisions are typically one shot decisions that are usually less structured than programm

ed decision. d, processe M A N A G E M E N T T I M E S T I M E S Problem Analysis vs. Decision Making. I t i s i m p o r t a n t t o d i f f e r e n t i a t e b e t w e e n p r o b l e m a n a l ys i s a n d d e c i s i o n making. The concepts are completely separate from one another. Problemanalysis must be done first, then the information gathered in that process may be used towards decision making. Problem Analysis 53 Level of ambiguity and chances of making a bad decision Lower Higher ModerateCertaintyUncertaintyRiskThedecisionMaker facesConditionsof...

d M A N A G E M E N T T I M E S T I M E S The nature of decision-making. The act of choosing one alternative from among a set of alternatives. Decision making can refer to either a specifi c act or a general process. M a k i n g a decision implies that there are alternative choices to b e considered, and in such a case we want not only to identify as many o f these alternatives as possible but to choose the one that (1) has the highestp r o b a b i l i t y o f s u c c e s s o r e f f e c t i v e n e s s a n d ( 2 ) b e s t f i t s w i t h o u r g o a l s , desires, lifestyle, values, and so on. Decision making is the process of sufficiently reducingu n c e r t a i n t y a n d d o u b t a b o u t a l t e r n a t i v e s t o a l l o w a reasonable choice to be made from among them. Th isdefinition stresses the information-gathering function of d e c i s i o n m a k i n g . I t s h o u l d b e n o t e d h e r e t h a t uncertainty is reduced rather than eliminated. Very fewd e c i s i o n s a r e m a d e w i t h a b s o l u t e c e r t a i n t y b e c a u s e complete knowledge about all the alternatives is seldompossible. Thus, every decision involves a certain amount of risk. If there isno uncertainty, you do not have a decision; you have an algorithm--a set of steps or a recipe that is followed to bring about a fixed result. Decision-Making Process

 The process of recognizing and defining the nature of adecision situation, identifying alternatives, choosing the bestalternative, and putting it into practice. An effective decision is one that optimizessome set of factors such as profits, sales,employee welfare, and market share. 51

Identifies a problem calling for. the intelligence phase the MIS collects The data is scanned, examined checked edited. Further the data is sorted amerged with other data and computations arede summarized and presented the process, the attention of the manhttp://www.scribd.com/doc/59458702/23/TheAdministrative-Model-of-Decision-Mhttp://www.scribd.com/doc/59458702/23/TheAdministrative-Model-of-Decisionhttp://www.scribd.com/doc/59458702/23/The-AdministrativeModel-of-Decisio M E T T Satisficing The tendency to search for alternatives only until one is found that meets some minimum standard of sufficiency to resolve the problem. A M I I N E M M A N E E G T S S

Coalition A political force in decision making which consists of an informal alliance of individuals or groups formed to achieve a goal. Intuition An innate belief about something without conscious consideration. Escalation of Commitment A decision maker is staying with a decision even when it app ears to b e wrong. Risk Propensity The extent to which a decision maker is willing to gamble when making a decision. Ethics and Decision Making I n d i v i d u a l e t h i c s ( p e r s o n a l b e l i e f s a b o u t r i g h t a n d w r o n g behavior) c o m b i n e w i t h t h e o r g a n i z a t i o n s e t h i c s t o c r e a t e managerial ethics. Components of managerial ethics: Relationships of the firm to employees. Employees to the firm.

The firm to other economic agents. Group and Team Decision Making in Organizations 57

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In more & more organization today, important decision are made by groupor team rather then individuals. Example include the executive committee of G e n e r a l M o t o r s a n d m a r k e t i n g p l a n i n g g r o u p a t d e l l . M a n a g e r s h a v e choose whether to have individual or team make a particular decision.There are several aspects of group cohesion which have a negative effecton group decision making and hence on group effectiveness. Risky-shiftphenomenon, group polarization, and group -think are negative aspects of group decision making which have drawn attention.Group-think is one of the most dangerous traps in our decision making. It'sparticularly because it taps into our deep social identification mechanisms -e v e r y o n e l i k e s t o f e e l p a r t o f a g r o u p a n d o u r a v o i d a n c e o f s o c i a l challenges. But consensus without conflict almost always means that other viewpoints are being ignored, and the consequences of group-think can bedisastrous. Decision making in social setting Decision making in groups is sometimes examined separately as p rocessand outcome. Process refers to the group interactions. Some relevant ideasinclude coalitions among participants as well as influence and persuasion.T h e u s e o f p o l i t i c s i s o f t e n j u d g e d n e g a t i v e l y , b u t i t i s a u s e f u l w a y t o approach problems when preferences among actors are in conflict, when d e p e n d e n c i e s e x i s t t h a t c a n n o t b e a v o i d e d , w h e n t h e r e a r e n o s u p e r - ordinate authorities, and when the technical or scientific merit of the optionsis ambiguous.In addition to the different processes involved in making decisions,group decision support systems( G D S S ) m a y h a v e

d i f f e r e n t d e c i s i o n r u l e s . A decision rule is the GDSS protocol a group uses to choose amongscenario planningalternatives. 58

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Gatheringinvolves all participants acknowledging each other's needsand opinions and tends towards a problem solving approach in whichas many needs and opinions as possible can be satisfied. It allowsfor multiple outcomes and does not require agreement from some for others to act.

Sub-committeeinvolves assigning responsibility for evaluation of adecision to a sub-set of a larger group, which then comes back to thelarger group with recommendations for action. Using a sub-committee is more common in larger governance groups, such as alegislature. Sometimes a sub-committee includes those individualsmost affected by a decision, although at other times it is useful for thelarger group to have a sub-committee that involves more neutralparticipants. Moral dimension of decision making The ethical principles of decision making vary considerably. Some commonchoices of principles and the methods which seem to match them include: The most powerful person/group decides. Everyone participates in a certain class of meta-decisions. Everyone participates in every decision.There are many decision making levels having a participation element. Acommon example is that of institutions making decisions that affect thosefor whom they provide. In such cases an understanding of whatparticipation l e v e l i s i n v o l v e d b e c o m e s c r u c i a l t o u n d e r s t a n d t h e p r o c e s s a n d p o w e r structures dynamics. Decision-makers and influencers In the context of marketing, there is much theory, and even more opinion,expressed about how the various 'decision-makers' and 'influencers' (thosew h o c a n o n l y i n f l u e n c e , not decide, the final decision) interact. Largep u r c h a s i n g d e c i s i o n s are frequently taken by groups, rather than 59

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individuals, and the official buyer often does not have authority to make thedecision. Forms of Group Decision Making Interacting groups or teams are the most common form of decision-making groups which consists of ane x i s t i n g g r o u p o r n e w l y f o r m e d t e a m i n t e r a c t i n g a n d t h e n m a k i n g a decision. Delphi groups are sometimes used for developing a consensus of expert opinion from a panel of experts who individually contribute through a moderator. Nominal groups are a structured technique designed to generate creati ve and innovativeideas through the individual contributions of alternatives that are winnowedd o w n t h r o u g h a s e r i e s o f r a n k - o r d e r i n g o f t h e a l t e r n a t i v e s t o r e a c h a decision.

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n-Making-Makingakingage drawn to all the problem situation b