Decision Making- An essence to
problem solving
Organisational Decision making
“ the process of responding to a problem by searching for
and selecting a solution or course of action that will
create value for organisational stakeholders”.
There are basically two kinds of decision that managers
called upon to make:
Programmed and non-programmed
Types of Problems and Decisions
Structured problems
* Involved goals that clear.
*Are familiar(have occurred before)
*Are easily and completely defined- information about
the problem is available and complete.
Programmed decision
*A repetitive decision the can be handled by a routine
approach.
Problems and Decisions ( cont’d)
Unstructured problems
* Problems that are new or unusual and for which
information is ambiguous or incomplete.
* Problems that will require custom-made
solutions.
Non-programmed decisions
* Decision that are unique and nonrecurring.
* Decision that generate unique responses.
Programmed vs. Non-programmed
Decisions
Characteristics Programmed Non-programmed
decisions decisions
Type of problem Structured Unstructured
Managerial level Lower level Upper level
Frequency Repetitive New,unusual
Information Readily available Ambiguous or
incomplete
Time frame for Short Relatively long
solution
Solution relies on Procedures,rules, and Judgment and creativity
policies
The Decision-
Making Process
Implement
Define the Evaluate
the chosen
Problem Alternatives
Alternative
Gather facts and Select the best Follow up and
develop alternative. evaluate the chosen
alternatives. alternative.
Decision Making Process
Identify a problem and decision criteria
and allocating weights to the criteria.
Developing, analyzing, and selecting an
alternative that can resolve the problem.
Implemented and selected alternatives.
Evaluating the decision’s effectiveness.
Step 1: Identifying the Problem
Problem
* A discrepancy between an existing and desired state
of affairs.
Characteristics of Problems
* A problem becomes a problem when a manager
becomes aware of it.
* there is a pressure to solve the problem.
* the manager must have the authority, information,
or resources needed to solve the problem.
Step 2: Identify the Decision
Criteria
Decision criteria are factors that are important
( relevant) to resolving the problem.
* Costs that will be incurred (investment
required).
* Risks likely to be encountered ( chance of
failure).
* Outcomes that are desired ( growth of the
firm).
Step 3: Allocating Weights to
the Criteria
Decision criteria are not of equal
importance:
* Assigning a weight to each item.
* Places the items in the correct priority
order of their importance in the decision
making process.
Step 4: Developing Alternatives
Identifying viable alternatives.
* Alternatives are listed ( without evaluation) that can
resolve the problem.
Step 5 :Analyzing alternatives
Appraising each alternative’s strengths and weaknesses
* An alternative’s appraisal is based on its ability to
resolve the issues identified in step 2 and step 3.
Step 6: selecting the alternative
Choosing the best alternative
* The alternative with the highest total
weight is chosen.
Step 7: Implementing the Alternative
Putting the decision to and gaining
comment from those whose will carry out
the decision.
Step 8: Evaluating the
decision’s effectiveness
The soundness of the decision is judged by
its outcomes.
* How effectively was the problem
resolved by outcomes resulting from the
chosen alternatives?
* if the problem was not resolve, what
went wrong?
The decision making process-Example
Identification of a problem “My sales Reps need new computers!”
Identification of Decision Criteria Memory and Storage, Display Quality,
Better Life,Warranty, Carrying weight
Allocation of weights to criteria Memory and Storage-10, Display
Quality -8, Better Life -6,Warranty -4,
Carrying weight-3
Development of alternatives
Toshiba, HP, Soni Vaio, Qosmio,
Gateway, Apple iBook, Lenovo, Dell
Analyzing of alternatives
Toshiba, HP, Soni Vaio, Qosmio,
Gateway, Apple iBook, Lenovo, Dell
Selection of alternatives
Toshiba, HP, Soni Vaio, Qosmio,
Implementation of alternatives Gateway, Apple iBook, Lenovo, Dell
Evaluation of decision alternatives “ Toshiba!”
Guideline for making decision more effective
Categorical interpretation- the problem should be
defined properly.
Application of limiting factor- limiting factor should
be taken into account in order to analyze
Adequate information- more quantity of reliable
information leads to effective decision making.
Considering other views- various views at the same
point are taken into account for quality decision.
Timeliness- decision should be ,made at proper time to
meet the competitive advantages.
Techniques for improving decision making
Brainstorming – idea generation for decision making.
Nominal group technique (NGT)- problem outlined,
presentation of solution in written form, discussion over
written solutions, and final decision.
Delphi technique- decision made on the basis of
questionnaire filled by the respondents.
Thank you
