Decision making. Everyone is a Decision Maker. Types of Managerial Decisions. Identifying the Problem

3 Decision making

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 I. Everyone is a Decision Maker

Everyone is a decision maker. We all rely on information, and techniques or tools, to help us in our daily lives. When we go out to eat, the restaurant menu is the tool which provides us with the information needed to decide what to purchase and how much to spend. Operating a business also requires making decisions using information and techniques — how much inventory to maintain, what price to sell it at, what credit arrangements to offer, how many people to hire.

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. The future is not known and sometimes even the past is suspect.

In our daily lives everyone is a decision maker. In an organisation, managers at all levels make decisions. All decisions have some influence — large or small — on performance. Thus, managers must develop decision-making skills.

The quality of managers' decisions is the yardstick of their effectiveness and of their value to the organization. Like it or not, managers are evaluated and rewarded on the bases of the importance, number, and results of their decisions.

П. 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.

III. Process of Decision Making

There are numerous approaches to decision making. Which is best depends on the nature of the problem, the time available, the mental skills of the decision maker.

Decisions are means rather than ends. They are the manager's responses to problems. Every decision is the outcome of a dynamic process influenced by many

forces.

Decision making is not a field procedure but it is a sequential systematic process. In most decision situations, managers go through a number of stages that help them think through the problem and develop alternative strategies: stating the problem, defining objectives, collecting information, developing and selecting solutions, implementing decisions and some others. The stages need not be rigidly applied; their value lies in their ability to force the decision make to structure the problem in a meaningful way. You may find it helpful to develop your own list of stags for the decision-making process:

1. Identifying the Problem

1) What is a 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).

2) Types of Problems