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DECISION MAKING

It is the fundamental process of management.


-Decision = choice made from available alternatives
-Decision Making = process of identifying problems and opportunities
and resolving them
Certainty, Risk, Uncertainty, Ambiguity
Certainty
all the information the decision maker needs is fully
available
Risk
decision has clear-cut goals
good information is available
future outcomes associated with each alternative are
subject to chance
Uncertainty
managers know which goals they wish to achieve
information about alternatives and future events is
incomplete
managers may have to come up with creative
approaches to alternatives
Ambiguity
by far the most difficult decision situation
goals to be achieved or the problem to be solved is
unclear
alternatives are difficult to define
information about outcomes is unavailable

EFFECTIVE DECISIONS
DECISION is a judgement.It is a choice between alternatives.
Managers who make effective decisions know that one does not
starts with facts.
EFFECTIVE MANAGER
EFFECTIVE MANAGER does not make a great many decision.
EFFECTIVE MANAGER know that a decision must be based on
principle and should be made on the merits of the case.
EFFECTIVE MANAGER insist on alternatives so that he can choose the
one appropriate one.
EFFECTIVE MANAGER makes constantly monitors the result of the
decision to ascertain that the desired objectives have been achieved.
Effective decision makers, compares the risk of action to
the risk of inaction

DECISION PROCESS

*IDENTIFY THE PROBLEM


-focal point of the process.
-the decision make must identify the criteria by which proposed
solutions will be judged.
*capital, time,profits, maintenance,return of investment,increase in
costs and risks.
*ANALYZING AND COMPARING ALTERNATIVES
- Often benefits from the use of mathematical or statistical
techniques

*SELECTION OF THE BEST ALTERNATIVES


*IMPLEMENTING THE CHOSEN SOLUTION
-carrying out the actions indicated by the chosen alternative. If the
alternative selected is to do nothing, no action will be required to
implement.
Reasons why Manager Insist on Disagreement before Decision
Making
1. It is only the safeguard against the decision makers becoming the
hostage of the organization. Everybody always wants something
from the decision makers.
2. Disagreement alone can provide to a decision. A decision without
an alternative is like a desperate gamblers throw, no matter how
carefully thought it might be, there is always possibility that the
decision will prove wrong either because it was wrong at the start
or because of a change in circumstances that makes it wrong.
3. Disagreement is needed to stimulate the imagination. But the
imagination of the high level is not in abundant supply. Neither is it
as scarce as is commonly believed. Imagination needs to be
challenged and stimulated or else, it remains dormant, not being
used.
REASONS FOR POOR DECISIONS
1. ERRORS MADE IN THE DECISION PROCESS
2. BOUNDED RATIONALITY
3. SUB-OPTIMISM