Explain the Decision Making Process with Example of Your Own

EXPLAIN THE stopping point MAKING PROCESS WITH EXAMPLE OF YOUR OWN. Introduction- Decision thrust is an intrinsic part of the virtu ally of the top conductors duties. Not even a psyche(a) day passes without taking decisivenesss contingently in modern organisations. Hence, management and ratiocination do argon considered as inseparable. In fact, whatever a charabanc does, he can do it only by taking roughly finish. All matters related to planning, organization, staffing, directing and controlling be engrossed in conclusion making puzzle out. That is why it is aptly pointed out that management is essentially a last-making touch.The survival and future achievement of any enterprise is instantaneously related to the ability to restrain timely and bewitch termination by the executives. Thus termination-making is said to be the heart of management. Lot of planning feat is to be initiated by the manager before taking any practicable decisiveness. The manager has to c atomic deem 18fully plan and decide what to do or what not to do. Wrong decisions sooner often be proved to be each costly or futile. To prevent much(prenominal)(prenominal) losses, decision-making exploit remains to be the core argon in all planned activities of the modern corporations. The plectron from among alternatives of a assembly line of work, according to this definition, picking one course of proceeding among alternatives acquirable is termed as decision-making as per Koontz and Weinrich. In the words of George Terry,decision-making is the selection of a particular course of action, ground on most criteria, from ii or more wantly alternatives. We can define this concept likewise as the process of choosing between heterogeneous alternatives for achieving a specified goal. every(prenominal) decision must(prenominal) flash into consideration needs and future uncertainties.As per Herbert Simon there atomic number 18 three major(ip) stairs in the decision making process. Decision making is about choosing from some(prenominal) options or ideas and taking action to generate a particular force. It is normally considered to be a sane and logical thinking process. JRecognition and to a lower placestanding of the difficulty. JVarious alternatives whitethorn be demonstrable. Jc beful assessment of alternatives available for taking a better decisions. Characteristics JDecision making is a continuous process. JThe head word of decision-making process must eer be rational when there atomic number 18 alternatives.JA decision-making process must al way of lifes be rational and purposeful. JDecision making is an listen process supported by satisfactory reasoning and run low judgment. JDecision making is all pervasive in the sense that all levels of managers need to admit decisions of varied nature. JDecision-making is always related to future only. Troes of Decisions Managerial decision may be classified into two categor ies, the first category acknowledges the typical, custom and inconsequential decisions and the s category covers most heavy, vital and strategic decisions.Apart from decisions be interpreted at dissimilar levels for meeting different fusss. Oraanisational Vs Personnel Decisions- As explained by Chester. I. Bernard, the decisions interpreted by the manager in his official capacity atomic number 18 termed as Organisational decisions. These decisions make water a direct passenger car on the functioning of the firm. Decision relating to re state of ward systems or transfer of workers can be cited as examples under this category. In contrast to this, some times, decisions may be taken by the manager in his individual capacity and such(prenominal) decisions are termed as individual(prenominal) decisions.They may partly affect the personal heart and partly affect the organization. Example,decision to quit the organization comes under this category. Routine Vs strategic Decis ion- Routine decisions involve little risk and uncertainty. Hence, they do not call for extraordinary sentiment and thinking. They are mostly related periodic conduct of the business and taken repetitively. Thats why they are normally taken at lower levels of management. On the other hand strategic decisions are taken by the top level management. Either they are concern with policy matters or with long-term commitments of the organization.They require thorough understanding, abstract and shell judgement, pertaining to location of the plant, quality of technology and channel of distri just nowion are the lift out examples of this type. Policy Vs Operating Decisions- Policy acts as guidelines for future action. Hence,decisions pertaining to policies are normally taken by the top management. They are considered to be very important since they affect the total organization. While operating decisions are administrative in character, they help in translating policies into action.De cisions relating to a new incentive scheme may be termed as a policy decision. Decisions relating to the methodology of implementation of such incentive scheme are termed as operating decisions. Programmed Vs Non-Programmed decisions- Programmed decisions usually deals with routine and repetitive worrys. For dealing such troubles, systematic policies, procedures and rules are established. Programmed decisions can be taken with little ease as everything goes according to some unsex of rules. But Non-Programmed decisions cover generally unexpected events and challenges.In other words, each job is crotchety in nature. For dealing with such special businesss, executives usually restore them to the top management, tackling such stains , the manager needs expertise,intuition and creative thinking. Individual Vs host decisions- Decisions taken by the individual in his personal capacity are known as individual decisions. Organisations which are small in coat can accommodate this type of decision-making process. When organizations grow in size and stature, building complex problems do come into picture.Group decisions are considered to be the crush under such situations. Group decisions represent the thinking of more than one executive. The various stairs involved in the decision-making process are as explained below- timber 1 Defining the oroblem The first step is to define the real problem, cash and efforts are going to be wasted if the problem is not intractable correctly. That s why, accurate diagnosis of the real problem is necessity to scram out right resolving power. We should look at the real ca examples and for the remedial measures by knowing the inner details of the problem.Knowing only the outer surface of the problem and arriving at decisions may lead to fallacious conclusions. SteP 2- AnalYSing the Problem at once the problem is clearly defined, then, it must be analysed in the light of selective information pertaining to various fact ors that surmount the decision. Every situation may keep up some advantages and limitations. Necessary steps should be laid on locating the limitations and obstacles in achieving the desired essence. Necessary care should be exercised in avoiding personalized persuade in judging the certain factors. Analysis of crucial factors provides a labored basis for making effective decisions. clapperclaw 3- Developing alternatives The psycho compend of the problem becomes roll in the hay once it throws light on several alternative solutions. In fact, the victor of decision-making process depends upon the ability of an executive in waxing alternative solutions to a assumption problem. This requires messiness of imagination, experience and judgement. Exploring the positive or negative match of such alternatives forms as a solid base for sound decisions. Step 4- Evaluating alternative Once the alternatives are developed , the next step is to survey them in wrong of their cause, time , impaction and objectives etc.Many a time, each marginal cost or cost-bene contact epitome is use to bring out the substantial benefits of each of such alternatives. Each alternative solution may have its own merits and de-merits. They should be canvasd with other alternatives for the purpose of appraising the real impact. As per Mr. Peter F Drucker, the important criteria for evaluating the consequences of different alternatives are risk,economy, time and limitations. Steo 5- Selecting the best possible solution Selection usually involves choice making. It is the last step in decision-making process.The manager has to select such an alternative course of action which can make the maximum contribution to the goal. It is not always possible to select the best alternative for a given problem. That is why the gutter has to rely upon such course of action which can yield good results under a given desexualize of circumstances and limitations. Step 6- Imolementing the decision O nce the best alternative is selected, it must be implemented. This step mainly deals with the execution of the decision taken. It involves development of step by step plans, sell the idea to sub-ordinates and seeking co-operation from the needy concourse.At this stage, the decision is converted into action. The decision must be implemented in the right time and that too in a proper way. Step 7- Evaluation of Decisions The last step in decision-making process is evaluation. The actual results of the decision should be compared with the expected results in revisal to locate the reasons for deviations. This review is a continuous process and it generates information for necessary feedback for further improving the decision-making process in future. understanding in decision-making Rationality refers to objective and intelligent action.A decision is said to be rational if appropriate means are chosen to accomplish desired objectives. It implies that decision-maker tries to maximize the value in a given situation by choosing the most adequate course of action. A good decision depends on the makers being consciously aware of the factors that set the stage for the decision. Obtaining complete rationality is not always possible. That is the reason why people prefer to take satisfactory decisions kinda of ideal or optimum decisions. Managers are not always confronted by the problem of rationality in decision-making.In practice, they confine themselves to few important alternatives which have limited risks combined with favourable consequences. Limits of Rational Decision making Managers are not always rational in their decision-making. They cannot always abide by the demands of rationality in decision-making process. There are some limitations to that and of which are as explained below. Since decisions are related to future, Managers cannot foresee all the consequences accurately. Moreover, lack of complete association about the problem also makes it impossible to choose a good decision.Due to time and cost constraints, all complex variables that have a bearing on decision cannot be examined fully. Hence, the decision maker is forced to belt a balance between complete rationality and hard realities on the ground. The impact of all the variables cannot be ascertained because some of them are intangible. The consequences of various alternatives cannot be anticipated accurately. Hence, decisions taken under uncertainty cannot guarantee the success of decision-making process. The Human factors like value systems, perceptions, social factors, institution etc. are the main limits on rational decision-making. Managers, being human beings, are greatly influenced by their personal beliefs, attitudes and biases. Because of this, the capacity of a decision-making process varies from individual to individual and from situation to situation. Every manger is vitally concerned with the higher up limitations in his approach to rational decision-making. He has to collect all the relevant information and try to overcome the above limits on rationality and choose the most rational decision for solving any given problem. Baiers of impelling Decision MakingApart from the above limitations, decision-making process remains to be ineffective because of the beingness of various barriers in organization structure. These barriers impede the process of identification of problems. Its analysis and the development of the solutions. The following are the important barriers that can block managerial effectiveness in choosing the most suitable decision as per Elbing. The course of a human-being to evaluate a given problem with pre-conceived notions, act as a stumbling block in understanding the real situation.though its dangerous, managers feel safer if they do not change what is familiar. Eventually, the ineffective decision of a familiar way becomes accepted rather than considering new and innovative means. Many managers fail to define the symptoms from the main problem. Many mangers have a tendency to respond to the problem instantaneously without proper infonmation and thinking. If they gather more infonnation, they become rather than what is unique in new problem. The above problems are mainly responsible for either indecision or for half decision in the modern organizations.Knowledge of the above problems ordain surely help the managers in arriving at pragmatic decisions. The following suggestions can be offered to overcome the above barriers so as to make the managers more effective in decision-making process. Avoid premature evaluation. Initiate simple probing by avoiding personal biases on the outcome. Develop a sound system that can supply adequate information for making decisions. progress radical leaders to respond to a given situation and compare the pros and cons of the solutions offered by the two stems for making an effective decision.Encourage innovative thinking among the sub-ordinates so as to id entify the crux of the problem without waste of time and money. When decisions of small and pivotal in nature are to be taken, encourage group thinking. For this, the problem is to be presented to the sub-ordinates first and they are asked to develop as legion(predicate) another(prenominal) solutions as possible in a lighten environment. Techniques of Decision -making cerebrate- Brainstorming is the oldest and widely followed proficiency for encouraging creative thinking. It was originally developed by A. F. Osbom. It involves the use of a group.This is an approach to improve problem stripping and solving by encouraging sub-ordinates to give their ideas and solutions in a redundant environment, they impart generate creative ideas. Continuous interaction finished ingenuous banters may result in spontaneous and creative thinking. The lifesizer the number of solutions , the fairer are the chances in locating an acceptable solution. The research proves that on instant brain storming system is likely to generate 50 150 ideas. It is fire to note that while most of them are proved to be impracticable, at least, some of them merit serious consideration.This group process is not without limitations. It continues lot of time and therefore,is an expensive exercise. Secondly,it emphasises only quantity of solutions which more often than not proved to be superficial. By overcoming the above limitations, a modern manager can use this an an effective tool. Some of the title of respected advantages of the brainstorming technique include- It reduces dependence on a single authority figure. It encourages the generate overlap of ideas. It stimulates participation among group particles. It provides individual safety in a competitive group. It maximizes output for a short period of time. It ensure a non critical climate. It tends to be enjoyable and stimulating. Synetics- When compared to Brainstorming, synectics is a new concept developed by William J. J. Gorden. The terms Synectics is derived from a Greek word which refers to Fitting together of divers(a) elements. It starts on the premise that this concept encourages novel thinking for the development of alternatives through putting together different ideas which are distinct from each other.A given problem is presented to a group of people with different orbits and varied experience. It is the state of the group leader to present the problem and lead the discussions in array to stimulate creative solutions. This approach ensures on the spot evaluation of members suggestions. The leader who is a technical expert is always assisting the group in evaluating the feasibility of their ideas. But experience shows that synectics has been less widely used than Brainstorming. When the problem is real tough and challenging, this approach is used for effective decision-making.Like Brainstorming it also suffers from the same range of limitations. The synectic techniwue includes the fol lowing steps- Problem statement and background information stage- The group leader describes the general area of discussion but avoids identifying the particularised problem . Creative thinking on the problem is encouraged. The leader presents background information on the problem and the goals associated with the idea solutions. nigh(a) wishing stage- Group members are encouraged to wish for anything that comes to mind that could address the problem.As in brainstorming, in this freewheeling stage people are encouraged to generate wild ideas and to hitchhike. Exploring ideas and not evaluating them are of utmost impressiveness at this stages. Excursion stage- Paricipants are asked to forget about the special problem. They are asked to generate ideas about a somewhat unrelated are that eventually might be related to the problem at hand. Forced-fit stage. Participants take ideas from the excursion stage and force them to fit the initial problem. Although this often appears quite u nusual and obtuse, it is intended to encourage creativity.In fact,evidence suggests that many great thinkers develop ideas from such experimental thinking. Intemized response stage- The group picks one of the ideas generated during the forced fit stage and pursues it further. The idea is dissected on only its positive aspects are identified. After all the positive aspects have been explored,the ideas limitations are addressed. This focus on the positive is intended to encourage productivity and creativity. The outcome of the synectic process is a single unique plan or decision that has undergone considerable evaluation.The process tends to produce innovative ideas. Synectic approach can be quite effective for creative planning and decision making. Its cost is high. Furthermore, it produces only one say-so solution to a problem. If that solution turns out to be unusable,the problem remains, and the process has failed. The Nominal Group The nominal group consists of people knowledge able on the issue to be decided who are in the same somatogenetic location and who are aware of each other but who do not directly interact while they are working together.The specific techniques for using the nominal group in decision-making vary with the situation, but usually the following steps are involved. l The manger brings the group together and outlines the problem. lEach member of the group generates a number of ideas in writing. lEach member then presents a single idea at a time to the entire group. The ideas are written on a blackboard or on large pieces of paper, and discussion of them is limited to clarification. When no further ideas merge, or when the manager feels the process has gone far enough, each member votes on the ideas, again in writing.The final decision is summed outcome of the individual votes, but the manager is free to accept or reject it. Ooerations explore- The Origin and development of operations research is attributed to military operations and a pplications in 2 world war. The war put tremendous pressure on the use of available meager resources for various strategic and tactical operations. The success of operations research in developing options of effective and efficient nature was instrumental in making this approach rather dependable in decision making process.Now-a-days, greater emphasis has been laid on the use of mathematical types to reflect different options and constraints in a situation and their effect on a selected goal. This vicenary approach to decision-making is usually referred as Operations Research. Of late, it has become an priceless tool in the kit of a decision-maker. Operations Research employs optimizing models like Linear Programming, Project Management,Inventory Control, Decision Theory and Waiting Line Theory.Operations Research is the systematic method of driveing the basic structure, functions and relationships of an organization as an open system. It always adopts a systems approach to mana gement in getting things done. It is invariably interested in developing optimal solution with limited resources in a given situation. It covers six steps in its approach to problem solving. They are a. Identification of a problem. b. Construction of a mathematical model to investigate the problem. c. Developing a good solution. d. Testing of the model in the light, the data available. e.Identifying and setting up of control points. f. Implementation of the option as a solution to a critical problem, putting a solution to work. In essence, Operations Research attempts to develop the best solution that will contribute to organizational goals. Limitations of Operation Research- Operations Research technique is not panacea to all the problems of modern management. In other words, it is not the end. Since Operations Research does not take intangible aspects into consideration, subjective judgement becomes difficult under this model.As the Operations Research technique directly depends upon the use of mathematical and statistical tools,it is increasingly becoming complex and costly exercise. Since decision making is a human process,It cannot be predicted properly. At the same time, the impact of such factors cannot be measurable. Delphi Technique- It is a technique normally used for forecasting future events. It is a group decision making technique. at a lower place this method, independent opinions are sought from the members repeatedly so as to develop a best solution to a given problem.The success of Delphi technique depends upon a simple technique of understanding the problem from the other mans perspective. This ensures success. Though it is a useful technique, since it involves time and cost,it can not be tried and true in all situations. At the operations level hundreds of de(isions are do in order to achieve local outcomes that contribute to the achievement of a companys overall strategic goal. However, all these decisions are interrelated and must be coordinated for the purpose of attaining the overall company goals. Many decisions-making situations occur under conditions of uncertainty.For example, the demand for a product may not be coke units next week but may vary between 0 and 200 units, depending on the state of the market, which is uncertain. Decision analysis is a set of quantitative decision-making techniques to aid the decision maker in dealing with a decision situation in which there is uncertainty. However, the usefulness of decision analysis for decision making is also a beneficial topic to study because it reflects a structured, systematic approach to decision making that many decision makers follow intuitively without ever consciously thinking about it.Decision analysis represents not only a collection of decision-making techniques but also an analysis of logic underlying decision making. The general process of the Delphi technique follows A add-in of people who are knowledgeable about a particular problem is se lected. The members of the group never actually meet. The panel can have members both inside and outside the organization, and the individual members may or may not know who the other members are. A questionnaire about the problem to be solved is sent to each members of the panel. Each person is asked to make unidentified suggestions.These suggestions are pooled, and a feedback report is developed. The feedback report and a more advanced, second stage questionnaire are sent back to the panel members. Each panel member independently evaluates the feedback report, votes on the priority of the ideas contained in it, and generates new ideas based on it. The process is repeated until a consensus is reached or until the manager feels that adapted information has been received to make a decision. A final sum-up feedback report is developed and set back to the group members. A major advantage of the Delphi approach is its anonymity.In groups that interact face-to-face, one person may dom inate, or everyone may watch the manager for clues to what is wanted. Further is interacting groups and individual may take a stand and not want to back down for awe of losing face. Frequently experts are more concerned with defending their position than with range a good decision. Electronic meetings The most recent approach to group decision making blends the nominal group technique with sophisticated computing machine technology. Its called the electronic meeting. The major advantages of electronic meetings are anonymity, honestly and speed.Participants can anonymously type any message they want and it flashes on the screen for all to see at the push of a participants board key. It also allows people to be brutally honest without penalty. And its fast because chitchat is eliminated, discussions dont digress and many participants can talk at once without stepping on one anothers toes. Experts claim that electronic meetings are as much as fifty louvre percent faster than tradit ional face to face meetings. Phelps Dodge mining for instance, used the approach to cut its annual planning meeting from several days down to twelve hours.Yet there are drawbacks to this technique. Those who can type fast can outshine those who are verbally eloquent but lousy typists, those with the best ideas dont get credit for them, and the process lacks the information grandness of face to face-to-face oral communication. But although this technology is currently in its infancy, the future of group decision making is very likely to include extensive use of electronic meetings. Decision making without probabilities- A decision making situation includes several components, the decision themselves and events that may occur in the future, known as states of nature.Future states of nature may be high or low demand for a product or good or bad economic conditions. At the time a decision is made, the decision maker is uncertain which state of nature will occur in the future and has n o control over these states of nature. When the probabilities can be depute to the occurrence of states of nature in the future, the situation is referred to as decision making under risk. When probabilities cannot be assigned to the occurrence of future events, the situation is called decision making under uncertainty.Each decision will result in an outcome or payoff, for each state of nature that will occur in the future. Payoffs are typically expressed in terms of profit, revenues, or cost. For example, if decision 1 is to expand a production speediness and state of nature a is good economic conditions, payoff la could b e $100,000 in profit. Once the decision situation has been nonionised into a payoff table, several criteria are available to reflect how the decision maker arrives at a decision, including maximax, maximin, minimax regret, Hurwicz, and equal likelyhood.These criteria reflect different degrees of decision-maker conservatism or liberalism. On occasion they resu lt in the same decision however, they often yield different results. Different decision criteria often result in a mix of decisions. The criteria used and the resulting decisions depend on the decision maker. For example, the extremely optimistic decision maker might disregard the precede results and make the decision to maintain the status quo, because the maximax criterion reflects his or her personal decision-making philosophy.