V The process of responding to a problem by

searching for and selecting a solution or

course of action that will create value for
organizational stakeholders´.

V There are basically two kinds of decision that

managers called upon to make:
Programmed and non-programmed
V `tructured problems
6 Mnvolved goals that clear.
6 Are familiar(have occurred before)
6 Are easily and completely defined- information
about the problem is available and complete.

V rogrammed decision
6 A repetitive decision the can be handled by a
routine approach.
V ñnstructured problems
6 roblems that are new or unusual and for which
information is ambiguous or incomplete.
6 roblems that will require custom-made
solutions.

V ×on-programmed decisions
6 îecision that are unique and nonrecurring.
6 îecision that generate unique responses.
6 Policy
6 A general guideline for making a decision about a
structured problem.

V Procedure
6 A series of interrelated steps that a manager can use to
respond ( applying a policy) to a structured problem.

V ule
An explicit statement that limits what a manager or
employee can or cannot do
 P


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Type of problem `tructured ñnstructured

Managerial level Lower level ñpper level

Frequency Repetitive ×ew, unusual

Mnformation Ready available Mncomplete

Time frame for solution `hort Relatively long

`olution relies on rocedures, rules & policies Judgment & creativity

 îefine the Mmplement the
Evaluate
problem chosen
alternatives
alternative

Follow up &
Gather facts &
`elect the best evaluate the
develop
alternatives chosen
alternatives
alternative
V Mdentify a problem and decision criteria
and allocating weights to the criteria.
V îeveloping, analyzing, and selecting an
alternative that can resolve the problem.
V Mmplemented and selected alternatives.
V Evaluating the decisionǯs effectiveness
V roblem
6 A discrepancy between an existing and desired state
of affairs.

V ©aracteristics of Problems
6 A problem becomes a problem when a manager
becomes aware of it.
6 There is a pressure to solve the problem.
6 The manager must have the authority, Mnformation, or
resources needed to solve the problem.
V îecision criteria are factors that are important
( relevant) to resolving the problem.
V Costs that will be incurred (investment required).
V Risks likely to be encountered ( chance of
failure).
V Outcomes that are desired ( growth of the firm)
0 îecision criteria are not of equal importance:

0 Assigning a weight to each item.

0 laces the items in the correct priority order of

their importance in the decision making process
V Mdentifying viable alternatives.
V Alternatives are listed ( without evaluation)
that can resolve the problem.
V Appraising each alternatives strengths and
weaknesses
V An alternatives appraisal is based on its
ability
V To resolve the issues identified in step 2 and
step 3
V Choosing the best alternative
V The alternative with the highest total weight
is chosen.
V utting the decision to and gaining comment
from those whose will carry out the decision
V The soundness of the decision is judged by its
outcomes.
V How effectively was the problem resolved by
outcomes resulting from the chosen
alternatives?
V Mf the problem was not resolve, what went
wrong?
V Mntuitive decision making

V Making decisions on the basis of experience,

feelings, and accumulated judgment
V ©ertainty
6 A situation in which a manager can make an
accurate decision because the outcome of every
alternative choice is known.

V isk
6 A situation in which the manager is able to
estimate the likelihood (probability) of outcomes
that result from the choice of particular
alternatives.
V ñncertainty
6 limited information prevents estimation of
outcome probabilities for alternatives associated
with the problem and may force managers or rely
on intuition, hunches, and gut feelings´.
V ypes of ecision akers
V irective
6 ñse minimal information and consider few alternatives.

V
nalytic
6 Make careful decisions in unique situations.

V ©onceptual
6 Maintain a broad outlook and consider many alternatives in
making decisions.

V Ñeavioral
6 Avoid conflict by working well with others and being receptive
to suggestions
V Over confidence
V Anchoring effect
V `elective perception
V Confirmation
V Framing
V Availability
V Representation
V Randomness
V `elf servicing
V Mt focuses on what is important
V Mt is logical and consistent.
V Mt acknowledges both subjective and objective thinking
and blends analytical with intuitive thinking.
V Mt requires only as much information and analysis as is
necessary to resolve a particular dilemma.
V Mt encourages and guides the gathering of relevant
information and informed opinion.
V Mt is straight forward, reliable, easy to use, and flexible
V `canning the situation to identifying a signal that a
decision should be made.
6 Receipt of authoritative communications from superiors.
6 Cases referred for decision by subordinates.
6 Cases originating from the manager.
V Classify the decision as routine, apply the appropriate
decision rule; as non-programmed, begin
comprehensive problem solving.
V Monitor and follow-up as necessary
V Categorical interpretation- the problem should be
defined properly.
V Application of limiting factor- limiting factor should
be taken into account in order to analyze the external
` & W.
V Adequate information- more quantity of reliable
information leads to effective decision making.
V Considering other views- various views at the same
point are taken into account for quality decision.
V Timeliness- decision should be ,made at proper time
to meet the competitive advantages.
V Ñrainstorming - idea generation for decision
making
V
ominal group tecnique (
-problem
outlined, presentation of solution in written
form, discussion over written solutions, and final
decision.
V elpi tecnique- decision made on the basis of
questionnaire filled by the respondents.
ñE`TMO×` ???