Types of Decision-making

Decision-making is the process of selecting the best course of action from a set of alternative
options to achieve a desired goal or objective. It involves four interrelated
phases: explorative (searching for potential alternatives), speculative (identifying the factors that
influence the decision problem), evaluative (analyzing and comparing the alternative courses of
action), and selective (making the final choice of the best course of action).

The ultimate aim of decision-making is to find the option that is believed to fulfil the objective of
the decision problem most satisfactorily compared to other alternatives.

Table of Content

• Types of Decision-making

• 1. Programmed and Non-programmed Decisions

• 2. Routine and Strategic Decisions

• 3. Organisational and Personal Decisions

• 4. Individual and Group Decisions

• 5. Tactical and Operational Decisions

• 6. Major and Minor Decisions:

• Types of Decision-making – FAQs

Types of Decision-making

Managerial decisions may be classified into the following categories:

1. Programmed and Non-programmed Decisions

According to Herbert Simon, programmed decisions are related to routine and repetitive problems.
Information about these problems is readily available and can be processed using pre-established
methods. These decisions have a short-term impact and are relatively simple, typically made at
lower management levels. Decision rules and procedures are in place to streamline the decision-
making process and save time. Little thought and judgment are required, as the decision-maker
follows predetermined solutions. For instance, dealing with a consistently late employee can be
addressed through established procedures.

On the other hand, non-programmed decisions tackle unique or unusual problems that demand a
high level of executive judgment and consideration. There are no ready-made solutions for such
problems, as they require creative and thoughtful approaches. Examples of non-programmed
decisions include introducing a new product or determining the location of a plant. These decisions
are usually made by higher-level managers.

2. Routine and Strategic Decisions

There are two types of decisions in an organization: routine (or operating) decisions and strategic
(or policy) decisions. Routine Decisions are repetitive in nature and have a short-term impact,
mainly concerning day-to-day operations. They are typically made at lower levels of management,
using established procedures to ensure quick and efficient handling. For example, a supervisor may
make routine decisions regarding employee overtime pay.

On the other hand, strategic decisions involve long-term commitments and significant investments,
influencing the entire organisation’s future. These decisions require careful deliberation and
judgment and are usually made at higher levels of management. Examples of strategic decisions
include launching a new product, selecting the location for a new plant, or implementing major
organisational changes.

3. Organisational and Personal Decisions

Organisational Decisions are made by officials in their capacity as resource allocators for the
organisation. These decisions rely on sound judgment and experience and can be delegated to other
individuals within the organisation. Organisational decisions have a direct impact on the functioning
of the organisation and its outcomes.

On the other hand, personal decisions are made by managers as individuals and cannot be
delegated. These decisions pertain to matters that directly affect their personal lives, such as
decisions to marry or enroll children in a boarding school. While personal decisions may have
implications for the individual manager, they may also indirectly affect the organisation. For
instance, the decision of a chief executive to retire early could have a direct effect on the
company’s future.

4. Individual and Group Decisions

Individual Decisions are made by an individual based on the information available to them. These
decisions may involve analyzing various variables, but they are often straightforward. However, in
certain situations, significant decisions may be made collectively by a group.

Group Decisions are taken by a team of individuals formed for this purpose, such as the decisions
made by a Board of Directors or a committee. These decisions are typically crucial for the
organisation. Group decision-making often leads to more realistic and well-balanced outcomes, as
different perspectives are considered. Encouraging participative decision-making can be a positive
organisational approach, but it may result in delays and can make fixing responsibility for such
decisions more complex.

5. Tactical and Operational Decisions

Tactical Decisions focus on how things will be done to achieve strategic goals. They are short-
term and usually involve specific actions that help meet the broader objectives set by
higher management. For example, a company deciding on a marketing campaign to boost sales in
the next quarter is making a tactical decision. These decisions are usually made by middle managers
and are meant to ensure that day-to-day operations align with the overall strategy.

On the other hand, operational decisions deal with the routine activities necessary for running an
organization. They are very short-term, often made on a daily or weekly basis, and involve specific
processes and procedures. For example, a manager deciding on the daily work schedule for
employees or handling customer complaints is making operational decisions. These decisions are
typically made by lower-level managers or supervisors who ensure that everything runs smoothly
and efficiently on a daily basis.
6. Major and Minor Decisions:

Major Decisions are significant choices that can have a long-lasting impact on our lives. For
example, deciding on a career path, choosing a life partner, or buying a house are major decisions.
These decisions often require careful thought, research, and sometimes advice from others because
they can affect our future in profound ways.

On the other hand, minor decisions are smaller choices that we make more frequently and with less
deliberation. Examples include what to eat for dinner, which clothes to wear, or what movie to
watch. These decisions usually have a short-term impact and can often be changed without much
consequence.

For major decisions, it is wise to take time, gather information, and consider the long-term
implications. For minor decisions, it’s often better to make a quick choice and move on, saving
mental energy for the more important decisions in life.

Besides the above mentioned decisions, there are several other decisions that need to be looked into
by an organization. One of those decisions is Buying Decision. It is a choice made by a consumer for
the purchase of a product or service.

https://www.geeksforgeeks.org/types-of-decision-making/