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4 - Decision Making Model

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25 views17 pages

4 - Decision Making Model

Uploaded by

himanshisingh1047
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Decision Making Model

Decision Making (Game of Alternatives)


Decision making

What is Decision making ??

Decision making is the judgment of the process by which one can choose
among a number of alternative courses of action for the purpose of achieving
goals.

Managerial decision making is synonymous with the whole process


of management.

It decides, what should be done? how should it be done? when and by whom
should be done? It calls for both judgemental and imagination activity to select
one from many alternatives, so decision making is an intellectual activity.
Importance of Decision making
• It is required to supply financial, technical, and other information as input to help
decision making at a higher management level for achieving maximum profit.
Decisions are generally made to fulfil the objectives of the organization.

• In business, whatever the business is small or big, changes in condition take place,
shifts in personal occur, unforeseen contingencies arise. Moreover just to get started,
and keep them moving, decisions must be made.

• Every aspect of the management (planning, organizing, control, etc) determines by


decision making.

• Decision making is important for all management activities. It helps to set objectives,
prepare plans of action, determine the organizational structure, motivate employees
to be more productive, and introduce innovations.
Decision making Model ?

• A decision-making model is a structured process used to guide teams to make


decisions. Each decision-maker model uses different methods to help to analyse
and overcome a particular challenge. Because decision-making models take
different approaches, they’re useful for people with different learning styles or time
constraints.

• Decision-making models can help teams simplify their decision-making


processes and collaborate more effectively. Models provide useful steps for teams
to follow to create solutions and describe their processes clearly to other team
members.

• When everyone on a team understands the decision-making model being used,


they can more easily contribute to the thinking process and together, reach a
balanced, successful solution.
Every decision has consequences
Orientation of Decision making..

Orientation of Decision making –

• Based on intuition

• Based on rationality

• Based on bounded rationality


Decision making Model

There are three kind of personalities who can take decisions based on –

• Based on intuition

• Based on rationality

• Based on bounded rationality

Even one personality can take decisions on the basis of all the mentioned models
depending upon the situations.
Decision making Model

1- Intuition based decisions-


• Some time we make decisions on Gut feeling.

• These decisions look quite impulsive.


Decision making Model

It is important to understand what is intuition ?-

• Experience

• Affection - related to emotions

• Values or ethics

• Sub-consciousness
Decision making Model

• Rather than logical reasoning, the intuitive decision model uses feelings and instinct to
make decisions. Often, team leaders or managers use this model to make quick
decisions when they don't have a lot of time for research or planning.

• The process of an intuitive decision is less structured and may use previous knowledge
of similar goals or obstacles to determine a useful solution.
Decision making Model

2. Rational decision model (Classical Model)


• The rational decision-making model focuses on using logical steps to come to the best
solution possible. This often involves analysing multiple solutions at once to choose
the one that offers the best quality outcome.

• Teams typically use the rational decision model when they have time for meetings and
research, which allows them to create a list of potential solutions and discuss the pros
and cons of each.
Decision making Model
Here are the steps to follow when using a rational decision-making model-

i) Define the goal or obstacle: we must define the goal or obstacle we wish to
achieve or overcome. Defining this helps us to understand exactly what outcome our
solution should produce.

ii) Determine the relevant information: we consider delegating research tasks to our
team or brainstorming during a team meeting. Determine what information about our
goal or obstacle is relevant to finding a solution.

iii) Create a list of options: Using the relevant information, the team can create a list
of potential options for solutions with evidences for why they would solve or achieve
our goal or overcome our obstacle.
Decision making Model

iv) - Arrange options by their value: After creating a list of options, arrange them by
their likelihood of success. Options that have a higher chance of success also have a
higher value, while options with little evidence may have a lower value.

v) - Choose the best option: Consider the value of each option and how it can help
the company succeed. With the help of the team, come to a consensus about the best
option for a solution using the information available.

vi) - Finalize your decision and take action: Once the team decides on the best
solution, clearly state the commitment to the solution and implement.
Decision making Model

3. Bounded Rationality decision model-

• Most of the time in the real world , it is quite difficult to know all the alternatives.

• Although as a manager or as an individual we want to be rationale. That’s why we


take good enough decisions.
Decision making Model

3. Bounded Rationality decision model-


• Bounded rationality is the idea that rationality is limited when individuals make
decisions, and under these limitations, rational individuals will select a decision
that is satisfactory rather than optimal (best).

• Limitations include the difficulty of the problem requiring a decision, the cognitive
capability of the mind, and the time available to make the decision. Therefore,
humans do not undertake a full cost-benefit analysis to determine the optimal
decision, but rather, choose an option that fulfils their adequacy criteria.
Thanks

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