The above diagram shows that a large number of disciplines influence and interact on strategic decision making in organisations. While most decision research focuses on choosing an optimal choice among a set of alternatives, a decision is any determination arrived at after consideration. Therefore, the manager must try to make the people understand what the decision involves, what is expected from them and what they should expect from the management. Goals should be stated positively i. If managers want to increase sales by spending more on advertisement but finance department refuses to accept extra financial burden on advertisement, this alternative should be dropped. Successful and effective decision making gives profitable outcomes, whereas unsuccessful decision making causes a great loss. The consequences of each alternative would also be considered.
What is the real cause of the problem? The experimentation approach can be quite expensive, especially if a program requires heavy capital expenditure and if several alternatives have to be tried out. Most people recommend that it should be employed more often in managing and that it should be the only way by which a manager can make sure that the plans are right. Evaluate Alternatives: All the alternatives are weighed for their strengths and weaknesses. A supervisor in a retail shop may realize that he has too many employees on the floor compared with the day's current sales volume, for example, requiring him to make a decision to keep costs under control. It also avoids some of the pitfalls, such as pressure to conform, group dominance, hostility, and conflict, that can plague a more interactive, spontaneous, unstructured forum such as brainstorming. In most cases recommendations from actual people instead of a search engines are preferred. Everyone involved with the decision must know his or her role in ensuring a successful outcome.
Implement the Alternative: The selected alternative should be implemented with least resistance from organisational members. We tend to see one pattern and consider it right. For one to take good decisions, these have to be evaluated in terms of the future. Or, perhaps there were consequences you did not anticipate. Decision Making Process: From company to company, and within the same company, the decision process is constantly changing. It also specifies both the nature and the causes of the problem. Evaluate them in terms of feasibility, risk, impact and benefit.
They should be given opportunities to ask questions and give their suggestions. Generally, there are five criteria on the basis of which alternatives are evaluated- feasibility, quality, acceptability, cost and ethics. Organizations sometimes face situations in which the absence of a specific resource or the presence of a particular constraint poses a problem for conducting its business. In selecting from among alternatives, a manager has three bases for decision open to him — experience, experimentation and research and analysis: a Reliance on past experience probably plays a larger part than it deserves in decision making. This method is costly as implementation of every alternative to the decision-making situation involves heavy expenditure. To spell out the rules is necessary because in many cases the right decision will require to change accepted policies or practices. This method may be suitable in the present circumstances only.
Article shared by : Decision making has following distinct phases:- 1. As a first step to decision-making, therefore, managers identify the problem. For Example — A company may test a new product in a certain region before expanding its sale throughout the country. Is it above or below your expectations? The second step in the definition of the problem is to determine the conditions for its solution. Decision making and problem solving are ongoing processes of evaluating situations or problems, considering alternatives, making choices, and following them up with the necessary actions.
Decision rules and procedures are established to save time and effort on such decisions. Ingenuity, research and creative imagination are required to make sure that the best alternative is considered before a course of action is selected. Identify Problems The first step in the process is to recognize that there is a decision to be made. Step 3 — Involves Determination of the Objectives: In the third step the objectives of the Business firm are determined. Understanding the process of managerial decision-making can improve your decision-making effectiveness.
Putting the Decision into Practice: The decision taken by the management will not serve the purpose if it is not executed into action for the development of the purpose for which decision has been taken. In order to have a complete look at the problem, the information should be gathered thoroughly, which relates to the involved shareholders or factors. The required resources for the implementation and the necessary cooperation from the people concerned have to be ensured. Define the situation Of the stages in decision making, this is probably the most significant step. If not, it signals a problem. Sometimes, the selection process can be fairly straightforward, such as the alternative with the most pros and fewest cons.
Their characteristics and general theme are presented next. The alternative should be monitored through progress reports to see whether the objective for which it was selected is achieved or not. They are hindrances to problem solving. Probably, one might have found the best alternative after comparing the pros and cons of different alternatives, yet the one should be 100% confident and sure to pick the best possible alternative. Managers can set up a budget; allocate time and money; assign responsibility for individuals to work out the specific tasks involved. Developing a sufficiently large number of alternative solutions at this stage, therefore, guarantees adequate focus and attention on the problem at hand.