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Week 10

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28 views34 pages

Week 10

Uploaded by

Noorien
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Chapter 10

Decision Making
Dr. Mohsin Uddin
Department of Accounting
Faculty of Economics and Administrative Sciences
Ishik University, Erbil
Learning objectives
After going through this chapter, you should
be able to:
• understand the process of decision
making;
• explain the styles of decision making;
• appreciate the individual differences in
decision making;
• describe the guidelines for effective
decision making
What is Decision
Making?
Decision making is the cognitive process
leading to the selection of a course of action
among alternatives.

Every decision making process produces a final


choice . It can be
an action or an opinion .

Examples: Shopping, deciding what to eat,


What to wear, when to sleep, etc..
Decision-making
Process
1. Identifying a problem

2. Identifying decision criteria

3. Allocating weights to criteria

4. Developing alternatives

5. Analyzing alternatives

6. Selecting an alternative

7. Implementing the alternative

8. Evaluation (of decision


Problem
Definition
Problem is a discrepancy (difference)
between an existing and a desired
state.

Example:
“ The manager has resigned, and we need another manager”
Here the phrase “manager has resigned” reflects the current
state while “need another manager” represents a desired state .
Developing Alternatives
Involves defining the possible alternatives (or choices)
that would resolve the problem.

In our case, the alternatives would be a list of candidates or


job
applicants.

Analyzing Alternatives
Alternatives are rated and analyzed on the basis of the

criteria The rating can be based on a specified scale , say

1 – 5 etc.
Selecting an alternative
Involves choosing the best alternative, based on the above
rating and analysis

Generally implies selecting the alternative with the highest


score.

Implementing the Alternative


Putting the decision into action

Involves clear communication of the decision to all concerned


and obtaining their commitment
Evaluation
Evaluation forms an integral part of any process

Involves evaluation of the outcome based on the desired goal


and criteria

Involves assessing the effectiveness and efficiency of the


outcome (or the entire process)

In case of any undesired results, each step of the


process is carefully reviewed to trace the root causes
6 C's of Decision
Making
1. Construct.

2. Compile.

3. Collect.

4. Compare.

5. Consider.

6. Commit.
Constru a clear picture of exactly what must be
ct
decided.
Compile a list of requirements that must be met.

Collect information on
alternatives that meet the
requirements.

Compare alternatives that meet the requirements.

Consider the “what might go wrong” factor with


each alternative.

Commit to a decision and follow through with it.


Problem Analysis vs Decision
Making
It is important to differentiate between problem analysis and
decision making. The concepts are completely separate from one
another. Problem analysis must be done first, then the
information gathered in that process may be used towards
decision making.
Decision Making

• Objectives must first be established

• Objectives must be classified and placed in order of importance

• Alternative actions must be developed


• The alternative must be evaluated against all the objectives

• The alternative that is able to achieve all the objectives is


the tentative decision

• The tentative decision is evaluated for more


possible
values
Decision-Making Stages
There are four stages that should be involved in all group
decision making. These stages, or sometimes called phases,
are important for the decision-making process to begin

1. Orientation stage- This phase is where members meet


for the
first time and start to get to know each other.

2. Conflict stage- Once group members become familiar


with each other, disputes, little fights and arguments
occur. Group members eventually work it out.

3. Emergence stage- The group begins to clear up


unclear opinions by talking about them.

4. Reinforcement stage- Members finally make a


The Decsi on maki ng
model Classify and define problem
or opportunity

Set objectives and


criteria

Generate creative and


innovative alternative

Analyze alternatives and select


the most feasible

Plan and implement


the decision

Control the decision


1. Define
and 2. Set
diagnose goals
7. Follow the
up and problem
External and 3. Search
control internal for
Environ. forces alternative
6.
solutions
Implement
the solution 5. 4.
selected Compare
Choose and
among evaluate
alternative solution
solutions
Decision-Making Styles

Reflexive Style
Makes quick decisions without taking the time to get all
the information that may be needed and without
considering all the alternatives.
Reflective Style
Takes plenty of time to make decisions, gathering
considerable information and analyzing
several alternatives.
Reliable Style
Habit of to make decisions without either rushing
( Hurry) or wasting time.
Decision-Making
Steps
When in an organization and faced with a difficult decision, there
are several steps one can take to ensure the best possible
solutions will be decided. These steps are put into seven effective
ways to go about this decision making process .

The first step - Outline your goal and outcome. This will
enable decision makers to see exactly what they are trying to
accomplish and keep them on a specific path.

The second step - Gather data. This will help decision


makers have actual evidence to help them come up with a
solution.

The third step - Brainstorm to develop alternatives. Coming up


with more than one solution enables you to see which one can
The fourth step - List pros and cons of each alternative.
With the list of pros and cons, you can eliminate the solutions
that have more cons than pros, making your decision easier.

The fifth step - Make the decision. Once you analyze each
solution, you should pick the one that has many pros (or the
pros that are most significant), and is a solution that everyone
can agree with.

The sixth step - Immediately take action. Once the


decision is
picked, you should implement it right away.

The seventh step - Learn from, and reflect on the decision


making. This step allows you to see what you did right and
wrong when coming up, and putting the decision to use.
SWOT Analysis – Strategic Use

Orienting SWOTs to An Objective - If SWOT analysis does not


start with defining a desired end state or objective, it runs the
risk of being useless.

If a clear objective has been identified, SWOT analysis can be


used to help in the pursuit of that objective. In this case,
SWOTs are:
Strengths Weaknesses
Attributes of the Attributes of the
organization that are organization that
helpful to achieving are harmful to
the objective. achieving the
objective.
Opportunities Threats
External conditions that are External conditions that are
helpful to achieving the harmful to achieving the
objective. objective.
SWOT Analysis –
Creative Use
Creative Use of SWOTs – If the objective seems attainable, the
SWOTs are used as inputs to the creative generation of possible
strategies, by asking (usually in groups) and answering each of
the following four questions, many times:

Strengths Weaknesses
How can we use How can we
each Strength? Stop each
Weakness?
Opportunities Threats
How can we How can we Defend
Exploit each against each
Opportunity? Threat?
Group Decision-
making
The factors requiring group decisions
include:

1. Involving sensitive issues

2. High cost alternatives

3. Involving very high risk factor

4. Strategic impact
Group Decisions:
Advantages
1. Acceptance of group members

2. Coordination is easier

3. Communication is easier

4. Existence of large alternatives

5. More information can be processed

6. Diversity of experience and


perspectives
Group Decisions:
Disadvantages
1. Take longer time

2. Group can be
indecisive(open)

3. Groups can compromise

4. Groups can be dominated

5. Groups can “ play games ”


Situational Factors for Group
Decision
Data collection Making Risk taking solution
needed
Importance of
Better understanding
acceptance Importance
Whole responsibility
of solution Complex
Feedback required
problem Democratic
Making Need for innovation
process and creativity
Improving Group
Decision-
 Making Brainstorming

 Nominal group
techniques

 Electronic meeting
Identify six decisions that you have taken
during last one year. Check which decisions
were made under certainty, under risk and
under uncertainty.

Decisions Certainty Risk Uncertainty


(Confidence)

1.
2.
3.
4.
5.
6.
“ Successful leaders have the courage to take action
while others hesitate.” - John C. Maxwell
Barriers to Good Decision
Making
1. Quick - Making quick decisions without having
much thought.

2. Narrow - Decision making is based on very


limited information.

3. Scattered - Our thoughts in making decisions


are disconnected or disorganized.

4. Uncertain - Sometimes, the lack of clarity on


important aspects of a decision causes us to
overlook certain important considerations.

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