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Decision Making Part1 Notes @

The document outlines the decision-making process in management, emphasizing its importance for effective organizational functioning. It details structured steps including identifying problems, criteria, alternatives, and evaluating decisions, while also discussing concepts like bounded rationality and the role of intuition. Ultimately, it highlights the necessity for managers to make informed choices despite limitations in information and resources.

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8 views8 pages

Decision Making Part1 Notes @

The document outlines the decision-making process in management, emphasizing its importance for effective organizational functioning. It details structured steps including identifying problems, criteria, alternatives, and evaluating decisions, while also discussing concepts like bounded rationality and the role of intuition. Ultimately, it highlights the necessity for managers to make informed choices despite limitations in information and resources.

Uploaded by

SOLO OWI
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 part 1

Slide 1 Introduction to Decision-Making

Decision-making is a fundamental process in management. It involves choosing


the best option of action from multiple alternatives. Every manager must make
decisions daily, whether small or significant. Effective decision-making ensures
that businesses and organizations run smoothly.

Slide 2 The Decision-Making Process

Decision-making is not a random process; it follows structured steps:

Identifying the problem – Recognizing an issue that needs a solution.

Identifying decision criteria – Determining what factors are important for making
the decision.

Allocating weights to criteria – Prioritizing the factors based on their importance.

Developing alternatives – Listing all possible solutions.


Analyzing alternatives – Evaluating the pros and cons of each solution.

Selecting an alternative – Choosing the best option.

Implementing the alternative – Putting the decision into action.

Evaluating the decision’s effectiveness – Checking if the decision solved the


problem.

Slide 3 Step 1 Identifying the Problem

A problem exists when there is a difference between the current situation and the
desired state or outcome. For example, if sales are dropping, a company needs to
identify the reason. A problem only becomes important if the manager notices it,
feels the need to solve it, and has the authority and resources to take action.
Slide 4 Step 2 Identifying Decision Criteria

Decision criteria are the factors that influence the decision. Managers must
decide what matters most in solving the problem. For example, if a company
needs new computers, they must consider factors like cost, battery life, and
storage capacity.

Slide 5 Step 3 Allocating Weights to Criteria

Not all criteria are equally important. Some factors have a bigger impact on the
decision than others. Assigning weights helps in ranking these factors. For
example, if battery life is more important than display quality when buying a
laptop, it should have a higher weight.

Slide 6 Step 4 Developing Alternatives

At this stage, managers list all possible solutions. The key here is to generate as
many ideas as possible without immediately judging them. For instance, if a
company is looking for ways to increase sales, alternatives could include lowering
prices, increasing advertising, or introducing new products.

Slide 7 Step 5 Analyzing Alternatives


Once the alternatives are listed, each one is evaluated based on its strengths and
weaknesses. This is done by checking how well each option meets the decision
criteria. For example, if one laptop has great battery life but is too expensive, the
manager must consider whether the benefit justifies the cost.

Slide 8 Step 6 Selecting an Alternative

The best alternative is chosen based on the highest overall score. This means
selecting the option that best meets the weighted decision criteria. For example,
if a company is choosing between different suppliers, it will pick the one that
offers the best balance of cost, quality, and reliability.

Slide 9 Step 7 Implementing the Alternative

Once a decision is made, it must be executed properly. Implementation involves


communicating the decision to employees and ensuring they understand their
roles. Without proper execution, even the best decisions will fail. For example, if a
company decides to launch a new product, it must coordinate marketing,
production, and distribution efforts.

Slide 10 Step 8 Evaluating the Decision’s Effectiveness


After implementation, managers must assess whether the decision achieved the
desired outcome. If the problem persists, they need to figure out what went
wrong and make necessary adjustments. For example, if a new marketing strategy
does not increase sales, the company may need to change its approach.

Slide 11 Rational Decision-Making

The rational decision-making model assumes that managers make logical choices
to maximize value. It assumes that they have access to all information, define the
problem clearly, and consider all possible alternatives before selecting the best
one. However, in real life, managers may not always have complete information.

Slide 12 Bounded Rationality

In reality, managers face limitations in their ability to process information. They


may not be able to explore every possible option due to time constraints, lack of
information, or complexity.define satisficing as choosing the first alternative
encountered that satisfactorily solves the problem rather than maximizing the
outcome by considering all possible alternatives. It means settling for a solution
that is "good enough" instead of spending time searching for the absolute best
option.

Slide 13 Escalation of Commitment


Sometimes, managers continue investing in a failing decision, even when
evidence suggests it is not working. This is called escalation of commitment. For
example, if a company has spent a lot of money developing a new product but it
is not selling well, they may continue spending more in the hope of success
instead of cutting losses.

Slide 14 The Role of Intuition

Not all decisions are made through careful analysis. Some decisions are based on
intuition, which comes from experience, emotions, and subconscious processing.
Experienced managers often rely on intuition when making quick decisions.

Slide 15 Types of Intuition in Decision-Making

There are different ways intuition plays a role in decision-making:

Experience-based decisions – Relying on past experiences.

Affect-initiated decisions – Making choices based on emotions.

Values or ethics-based decisions – Deciding based on personal or company values.


Cognitive-based decisions – Using subconscious knowledge.

Subconscious processing – Making decisions without actively thinking about


them.

Slide 16 Decision-Making in Management Functions

Decision-making is an essential part of all management activities:

Planning – Deciding company goals and strategies.

Organizing – Determining team structure and responsibilities.

Leading – Motivating employees and setting leadership styles.

Controlling – Monitoring progress and correcting mistakes.Decision-making is an


essential part of all management activities.

Conclusion
Effective decision-making is crucial for managers. It requires identifying problems,
evaluating alternatives, and making logical choices. While rational decision-
making is ideal, managers often work with limited information and rely on
intuition. Understanding the decision-making process helps managers make
better choices and improve organizational success.

Faizan

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