Managerial Decision Making

Managerial decision making•Decision-making is the process by which a

course of action is selected as the way to deal with a specific problem.

•Managers are usually evaluated and rewarded on the basis of the importance and results of their decisions

Types of Decisions

Significance and limitations of rational decision-making

•The process of rational decision-making is very similar to the process of strategic planning.

Significance of rational decision-making•Managers who use a rational, intelligent

and systematic approach are more likely to come up with high quality solutions.

•They have a clear understanding of alternative courses of action

Significance of rational decision-making•It is based on the information available

with the decision-makers and their ability to evaluate alternatives

•Rational decision-making aims a deciding the best solution

Level of managers responsible for making decisions

Middle –Level Management

Lower-Level Management

Upper-Level Management

Narrow Decision

Intermediate Decision Broad Decision

Limitations of rational decision-making •Difficult for managers to be completely

rational

•Difficult to determine all the alternative courses of action

•Difficult to implement in areas not ventured into

Limitations of rational decision-making•All possible alternatives cannot be

thoroughly analyzed

•Limitation of information, time and certainty curb rationality

•Risk avoiding tendency disrupts their rational decision-making process

Decision-making process•Identify the problem•Scanning stage•Categorization stage•Diagnosis stage

•Identify resources

•Generate alternative solutions•Brainstorm

Decision-making process

•Evaluate alternatives

•Implement the decision

•Monitor the decision

How to make a business plan•The following steps are followed in the

process of making a business plan:

•1. Understanding your business - Situation Analysis

•2. What do “you” want? – Forming Personal Objectives

•4. Forming the right business objectives

How to make a business plan

•5. Forming Strategies And Tactics•

6. Written Document

•7. Review & Control and back to Step 1