ASSIGNMENT # 02
NAME: Syed ANEES ALI
ROLL # SP20-MBA-0041
SUBJECT: PRINCIPLE OF MANAGEMENT
TEACHER: SIR HUMAIR UMAR
DECISION MAKING
Introduction:
Decision-making is an integral part of modern management. Essentially,
Rational or sound decision making is taken as primary function of
management. Every manager takes hundreds and hundreds of decisions
subconsciously or consciously making it as the key component in the ro le
of a manager. Decisions play important roles as they determine both
organizational and managerial activities. A decision can be defined as a
course of action purposely chosen from a set of alternatives to achieve
organizational or managerial objectives or goals. Decision making process
is continuous and indispensable component of managing any
organization or business activities. Decisions are made to sustain the
activities of all business activities and organizational functioning .
Definition by Management Theorist:
Decision-making is the selection based on some criteria from two or
more possible alternatives. “-—George R.Terry
A decision can be defined as a course of action consciously chosen
from available alternatives for the purpose of desired result —J.L.
Massie
A decision is an act of choice, wherein an executive forms a
conclusion about what must be done in a given situation. A decision
represents a course of behavior chosen from a number of possible
alternatives. -—D.E. Mc. Farland
Features or Characteristics of Decision-Making:
1. Rational Thinking:
It is invariably based on rational thinking. Since the human brain with its
ability to learn, remember and relate many complex factors, makes the
rationality possible.
2. Process:
It is the process followed by deliberations and reasoning.
3. Selective:
It is selective, i.e. it is the choice of the best course among alternatives. In
other words, decision involves selection of the best course from among
the available alternative courses that are identified by the decision -
maker.
4. Purposive:
It is usually purposive i.e. it relates to the end. The solution to a problem
provides an effective means to the desired goal or end.
5. Positive:
Although every decision is usually positive sometimes certain decisions
may be negative and may just be a decision not to dec ide.
For Example, the manufacturers of VOX Wagan car once decided not to
change the model (body style) and size of the car although the other rival
enterprise (i.e. the Ford Corporation) was planning to introduce a new
model every year, in the USA.
6. Commitment:
Every decision is based on the concept of commitment. In other words,
the Management is committed to every decision it takes for two reasons-
viz., (/) it promotes the stability of the concern and (ii) every decision
taken becomes a part of the expectations of the people involved in the
organization.
Decisions are usually so much inter -related to the organizational life of
an enterprise that any change in one area of activity may change the other
areas too. As such, the Manager is committed to decisions not only from
the time that they are taken but up to their successfully implementation.
7. Evaluation:
Decision-making involves evaluation in two ways, viz., (i) the executive
must evaluate the alternatives, and (ii) he should evaluate the results of
the decisions taken by him.
Steps of the Decision Making Process:
The following are the seven key steps of the decision making process.
Identify the decision:
The first step in making the right decision is recognizing the problem or
opportunity and deciding to address it. Determine why this decision will
make a difference to your customers or fellow employees.
Gather information:
Next, it’s time to gather information so that you can make a decision
based on facts and data. This requires making a value judgment,
determining what information is relevant to the decision at hand, along
with how you can get it. Ask yourself what you need to know in order to
make the right decision, then actively seek out anyone who needs to be
involved.
Identify alternatives:
Once you have a clear understanding of the issue, it’s time to identify
the various solutions at your disposal. It’s likely that you have many
different options when it comes to making your decision, so it is
important to come up with a range of options. T his helps you determine
which course of action is the best way to achieve your objective.
Weigh the evidence:
In this step, you’ll need to “ evaluate for feasibility, acceptability and
desirability” to know which alternative is best, according to management
experts Phil Higson and Anthony Sturgess. Managers need to be able to
weigh pros and cons, then select the option that has the highest chances
of success. It may be helpful to seek out a trusted second opinion to gain
a new perspective on the issue at hand.
Choose among alternatives:
When it’s time to make your decision, be sure that you understand the
risks involved with your chosen rout e. You may also choose a
combination of alternatives now that you fully grasp all relevant
information and potential risks.
Take action:
Next, you’ll need to create a plan for implementation. This involves
identifying what resources are required and gainin g support from
employees and stakeholders. Getting others onboard with your decision
is a key component of executing your plan effectively, so be prepared to
address any questions or concerns that may arise.
Review your decision:
An often-overlooked but important step in the decision making process
is evaluating your decision for effectiveness. Ask yourself what you did
well and what can be improved next time.
“
Decision-making Styles
There are countless perspectives and tactics to effective decision -making.
However, there are a few key points in decision -making theory that are
central to understanding how different styles may impact organizational
trajectories. Decision-making styles can be divided into three broad
categories:
Psychological:
Decisions derived from the needs, desires, preferences, and/or
values of the individual making the decision. This type of decision -
making is centered on the individual deciding.
Cognitive:
This is an integrated feedback system between the
individual/organization making a decision, and the broader
environment’s reactions to those decisions. This type of decision -
making process involves iterative cycles and constant assessment of
the reactions and impacts of the decision.
Normative:
In many ways, decision making (particularly in groups, such as
within an organization) is about communicative rationality. This is to
say that decisions are derived based on the ability to communicate
and share logic, using firms premises and conclusions to drive
behavior.
Common Challenges of Decision Making
Although following the steps outlined above will help you make more
effective decisions, there are some pitfalls to look out for. Here are
common challenges you may face, along with best practices to help you
avoid them.
Having too much or not enough information:
Gathering relevant information is key when approaching the decision
making process, but it’s important to identify how much background
information is truly required. “An overload of information can leave you
confused and misguided, and prevents you from following your
intuition,” according to Corporate Wellness Magazine.
In addition, relying on one single source of information can lead to bias
and misinformation, which can have disastrous effects down the line.
Misidentifying the problem:
In many cases, the issues surrounding your decision will be obvious.
However, there will be times when the decision is complex and you aren’t
sure where the main issue lies. Conduct thorough research and speak
with internal experts who experience t he problem firsthand in order to
mitigate this. It will save you time and resources in the long
run, Corporate Wellness Magazine says.
Overconfidence in the outcome:
Even if you follow the steps of the decision making process, there is still
a chance that the outcome won’t be exactly what you had in mind. That’s
why it’s so important to identify a valid option that is plausible and
achievable. Being overconfident in an unlikely outcome can lead to
adverse results.
“Decision making is a vital skill in the bus iness workplace, particularly
for managers and those in leadership positions. Following a logical
procedure like the one outlined here, along with being aware of common
challenges, can help ensure both thoughtful decision making and positive
results”.
