Rakesh ppt on decision making
- 1. SUBMITTED TO :- SUBMITTET BY :- Dr. RAJAN SHARMA RAKESH KUMAR MBA 1st YEAR ROLL NO. 17
- 2. Consciously or sub-consciously , we make a number of decision (important and routine) in our daily lives. Sometimes, decision are taken without analysing their impact on our behaviour. In the business world, however, decision-making is done in a scientific and rational manner as decision affect the efficiency of business operations and interest with the business. INTRODUCTION
- 3. Decision-making means selecting a course of action out of alternative courses to solve a problem. MEANING OF DECISION MAKING
- 4. FEATURES OF DECISION-MAKING Decision is a goal-oriented. The purpose of decision is to achieve a goal; sectional, departmental and organizational. It is required for every managerial function through it is closely related to planning. It is a process of choosing a course of action out of various courses to solve a specific problem. Problem-solving is the basic for decision-making as decision are made to solve problem. Unless there are problem, there will be no decision-making. Decisions are made to solve organizational problem and exploit environmental opportunities. Both problem and opportunities, thus, need decision-making. It is a pervasive process. Decisions are made in business and non- business organizations. In business organizations, they are made at all levels. Decision are made in all levels in the organization; though nature and importance of decision vary at different levels. However, overall organization effectiveness is determined by the quality of decision made at all the levels. It is required for every situation _ certainty, risk or uncertainty. It is continuous process. Managers continuously evaluate organizational activities and find problems that require decision-making.
- 5. Decision-Making Process Identify the problem Diagnose the problem Establish objectives Collect information Generate alternatives Evaluate alternatives Select the alternative Implement the alternative Monitor the implementation
- 6. STEP 1. IDENTIFY THE PROBLEM Decision are made to solve problems. As a first step to decision-making, therefore, managers identify the problem. Problem is any deviation from a set of expectations. Managers scan the internal and external environment to see if the organizational operations conform to environmental standards. If company’s sales target is 10,000 units per annum but actual sales are 7,000 units, managers sense problem in company. The problem is identified with the marketing department. Managers use their judgment, imagination and experience to identify the problem as wrong identification leads to wrong decision
- 7. STEP 2. DIAGNOSE THE PROBLEM Manager find cause of problem by collecting facts and information that have resulted in the problem. Diagnosis help to define the problem; its cause, dimensions, degree of severity and origin so that remedial action can be taken. Manager get to the core of the problem and isolate the problem in a separate category of operations called the problem-solving area. In the above example, manager search for reasons of low sale. It could be low quality, poor promotion, better product introduced by competitors etc. The exact reason is found and the problem is said to have been diagnosed.
- 8. STEP 3. ESTABLISH OBJECTIVES Objective is the end result that managers achieve through the decision-making process. Establish objectives means deciding to solve the problem. The resolution forms the objective of decision- making. If the reason low sales is poor salesmanship, managers form the objective of improving the skills of salesmen to promote sales.
- 9. STEP 4. COLLECT INFORMATION In order to generate alternatives to solve the problem, managers collect information from the internal and external environment. Information provides inputs for generating solutions. Information can be quantitative or qualitative. It should be reliable, adequate and timely so that right action can be taken at the right time.
- 10. STEP 5. GENERATE ALTERNATIVES Alternatives means developing two or more ways of solving the problem. Members develop as many solution as possible to choose the best, creative and most applicable alternative to solve the problem.
- 11. STEP 6. EVALUATE ALTERNATVS All the alternatives are weighed against each other with respect to their strength and weakness. They are useful if they help to achieve the objective. Alternatives are evaluated in terms of acceptable criteria to analyse their impact on the problem. Various quantitative and qualitative criteria against which alternatives are evaluated are as follows : COSTS :- Alternatives should not be costly. Improving the skills of salesmen by firing the existing salesmen and hiring new once may involve strain on company’s financial resources. Such alternatives should be avoided. RESOURCES :- The alternatives must fit into the organization’s resource structure. They must be feasible with respect to budgets, policies and technological set up of the organization. ACCEPTABLE :- Alternatives should e acceptable to decision-making and those who are affected by the decision. REVERSIBLE :- A decision is reversible if it take back and other measures can be adopted.
- 12. STEP 7. SELECT THE ALTERNATIVE After evaluating the alternatives against accepted criteria, managers screen the non-feasible alternatives and select the most alternative to achieve the desire objective. Alternative can be selected through the following approaches: EXPERIENCE :- Past experience guides the future. Manager follow past action, search for their successes and failures, analyse them in the context of future environment and select the most suitable alternative that suits the present situation. EXPERIMENTATION : - An alternative to experience is experimentation where each alternative is put to practice and the most suitable alternative is selected. This method is costly, in terms of time and money . RECEARCH AND ANALYSIS :- It helps to search and analyse the impact of future variables on the present situations, apply mathematical models and select the most suitable alternative. This method is more suitable and less costly in terms of time and money.
- 13. STEP 8. IMPLEMENT THE ALTERNATIVE The selected alternative should be accepted and implemented by the organizational members. Implementation must be planned. Those who will be affected by implementation should participate in the implementation process to make effective and fruitful. Implementation of the alternative should ensure the following : The selected alternative should be communicate to everyone in the organization. Changes in the organization structure because of implementation should be communicated to everyone in the organization. Authority and responsibility for implementation should be specifically assigned. Resources should be allocated to departments for carrying out the decision. Budget, schedule procedures and control should be established to ensure effective implementation. A committed workforce should be promoted. Unless everyone is committed to the decision, the desired outcome will not be achieved.
- 14. STEP 9. MONITOR THE IMPLEMENTATION The implementation process should be monitored to know its acceptability amongst organizational member. The alternative should be regularly monitored, through progress report, to see weather the objective for which it was selected is achieved or not.
- 15. Programmed Decision A decision that is repetitive and routine and can be made by using a definite, systematic procedure. Nonprogrammed Decision A decision that is unique and novel. The Principle of Exception “Only bring exceptions to the way things should be to the manager’s attention. Handle routine matters yourself.” Types of Decisions Programmed Decisions Nonprogrammed Decisions