Decision Making Skills

Decision Making

• Decision
– A decision is a commitment of resources, direction or
reputation.

• Decision Making
– It is defined as the selection of a course of action among
alternatives.
– Decision making is the central job of management.
Programmed & Non-Programmed Decisions

• Programmed Decisions
– Applied to routine problems
– Relies primarily on previously established criteria
– In effect, decision making by precedent
– Eg. Production as per the standards, Reordering of standard
inventory item
• Non-programmed Decision
– Applied to unstructured, novel, ill-defined situations of a non
recurring nature.
– Strategic decisions are generally non programmed decisions.
– Generally made by upper level managers
– Eg. Development of a new car, Where to build a new plant
 Programmed & Non-Programmed Decisions

Highest Level
Unstructured Non - Programmed

Structured Programmed
Lowest Level

Organizational Level Nature of Problems Nature of Decision Making

 Decision Making Process

• Premising
• Identifying Alternatives
• Evaluating Alternatives (in terms of goal sought)
• Selecting Alternative (i.e., making a decision)
• Implement the Decision
• Monitor the Decision
 Decision Making Process

• Premising
– Identifying the Problem
– Identifying Resources and Constraints
• Identifying Alternatives
• Evaluating Alternatives (in terms of goal sought)
• Selecting Alternative (i.e., making a decision)
 Decision Making Process

• Premising
– Identifying the Problem
- Scanning
- Categorization
- Diagnosis

– Identifying Resources and Constraints

• Identifying Alternatives
• Evaluating Alternatives (in terms of goal sought)
• Selecting Alternative (i.e., making a decision)
 Decision Making Process

• Premising
– Identifying the Problem
– Identifying Resources and Constraints
- People
- Money
- Material
- Time
- Equipment
- Expertise
- Information
• Identifying Alternatives
• Evaluating Alternatives (in terms of goal sought)
• Selecting Alternative (i.e., making a decision)
 Decision Making Process

• Premising
• Identifying Alternatives
– Individual
– Brainstorm
 Decision Making Process

• Premising
• Identifying Alternatives
– There are always more than one ways of doing a thing.
– Ability to develop alternatives is also very important.

• Evaluating Alternatives (in terms of goal sought)

• Selecting Alternative (i.e., making a decision)
 Decision Making Process

• Premising
• Identifying Alternatives
– When alternatives are too large in number, we need to use
the Limiting of Strategic Factor
– Limiting Factor is the factor that stands in way of
accomplishing a desired objective.
– It helps us to narrow down the list of alternatives

• Evaluating Alternatives (in terms of goal sought)

• Selecting Alternative (i.e., making a decision)
 Decision Making Process

• Premising
• Identifying Alternatives
• Evaluating Alternatives (in terms of goal sought)
– Quantitative - Cost, Time, etc
– Qualitative - Risk of technological change, Political
Environment, Labour Relations
 Decision Making Process

• Premising
• Identifying Alternatives
• Evaluating Alternatives (in terms of goal sought)
– Feasibility
– Quality
– Acceptability
– Costs
– Ethics

• Selecting Alternative (i.e., making a decision)

 Decision Making Process

• Premising
• Identifying Alternatives
• Evaluating Alternatives (in terms of goal sought)
• Selecting Alternative (i.e., making a decision)
– Experience
– Experiment
– Research & Analysis