Decision making. Types of Managerial Decisions. Identifying the Problem. Types of Problems. Collecting and Analysing the Data

Decision making

1.Decision making is the process of thought and deliberation that results in a decision. Decisions, the output of the decision-making process, are means through which a manager seeks to achieve some desired state. Decision making is the systematic process of identifying and solving problems, of asking questions and finding answers. Decisions usually are made under conditions of uncertainty.

2. Types of Managerial Decisions

When a particular problem occurs often, managers develop a routine procedure for solving it. Thus programmed decision have repetitive and routine solutions, the managers of most organisations face great numbers of programmed decisions in their daily operations. Such division should be made without expending unnecessary time and effort on them.

When a problem is complex or extremely important, it requires a different and, perhaps, unique solution. Nonprogrammed decisions are solutions for novel and unstructured problems. What is important, is that the need for nonprogrammed decisions be properly identified. On the basis of this type of decision making, billions of dollars in resources are allocated every year. Government organisations make decisions that influence the lives of every citizen; business organisations make decisions to manufacture new products, etc. Unfortunately, such decisions have traditionally been handled by problem-solving processes, judgement, intuition, and creativity.

Coping with nonprogrammable decisions, always a formidable task, is especially so in small firms. The small business manager just may not have the managerial and financial resources to deal with difficult situations when they arise. Such managers must consider the possibility of hiring someone else to make the decisions. Programmed decisions are made at lower levels of management; nonprogrammed decisions are made at higher levels of management.

3.

1. Identifying the Problem

What is a problem? A problem is a situation that presents difficulty or perplexity. Problems come in many shapes and sizes. For example, it can be:

1.   Something did not work as it should and out don't know how or why.

2.   Something you need is unavailable.

3.  Employees are undermining a new program.

4.   The market is not buying. What do you do to survive?

5.   Customers are complaining. How do you handle their complaints? Where do problems come from? Problems arise from every facet of human and

mechanical functions as well as from nature. Some problems we cause ourselves (e.g., a hasty choice was made and the wrong person was selected for the job); other problems are caused by forces beyond our control (e.g. a warehouse is struck by lightning and burns down).

Types of Problems

Problems are usually of three types: opportunity, crisis, or routine. Crisis and routine problems present themselves and must be attended to by the managers. Opportunities, in contrast, must be found; they wait to be discovered. Often they go unnoticed and are eventually lost by an inattentive manager. Because, by their very nature, most crisis and routine problems demand immediate attention, and a manager may spend a great deal of time in handling minor crises and solving routine problems and may not have time to pursue important new opportunities. Many well-managed organisations try to draw attention away from crises and routine problems and toward longer-range issues through planning activities.

To locate problems, managers rely on several different indicators, the so-called warning signals:

1.   Deviation from past performance. A sudden change in some established pattern of performance often indicates that a problem has developed.

2.   Deviation from the plan. When results do not meet planned objectives, a problem is likely.

3.   Outside criticism. The actions of outsiders may indicate problems.

2. Defining the Objectives

Objectives usually are stated by an action verb like to reduce, to increase, or to improve. Dealing with the customer order problem, the major objectives would be: 1) to increase the percentage of orders filled correctly, and 2) to reduce the time it takes to process an order.

3. Collecting and Analysing the Data

In order to appropriately identify the problem and its causes, you must do some research.  Raw data are then tabulated and organised to facilitate analyse. Tables, charts, graphs, indexes and matrices are some of the standard ways to organise raw data.

After you've gathered the information and analysed it, you will have a pretty clear understanding of the problem and what the major causes of the problem are. Now, you should summarise the problem as briefly as possible.

4. Developing (Generating) Alternatives

Developing (Generating) Alternatives

Once the problem is defined, feasible alternatives to the problem should be developed and the potential consequences of each alternative should be considered. This search process investigates the internal and external environments of the organisation to provide information that can be developed into possible alternatives. This search is conducted within certain time and cost constrains.