mis presentation.docx

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INTRODUCTION

We all are probably no stranger to the term decision making. If we think about the

difficulties involved in making decisions in our own life, like what college toattend or which books to refer or what job to take, we can surely appreciate howcomplicated and important the process of decision making can be in organizations,where the stakes are often considerable and the impact is widespread.

Decision Making may be simply defined as the process of making choices fromamong several alternatives. It is the selection based on some criteria from two ormore possible alternatives. To decide means to to cut off or in practical content,to come to conclusion

Decision- making is an essential part of every managers job. Managers areessentially decision-makers. They manage by making decisions and getting themimplemented through their subordinates. They make several types of decisions onthe basis of available information, intuition and creativity. Managers have often tomake decisions under uncertain and risky conditions. Their own success and thefuture of their organizations largely depends upon the quality of decisions and theirimplementation.

What is a decision?

Every day, each of us makes numerous decisions concerning every aspect of ourdaily lives. However, we generally make these decisions without stopping think about how we make them and what is involved in the particular decision-makingprocess itself In the most general terms, a decision is the selection of an optionfrom two or more alternative choices. In other words, for a person to make a

decision, a choice of alternatives must be available. When a person has a choicebetween making a purchase and not making a purchase. a choice between brand Xand brand Y or a choice of spending time doing A or B, that person is in a positionto make a decision. On the other hand, if the consumer has no alternatives fromwhich to choose and is literally forced to make a particular purchase or take aparticular action (e.g., use a prescribed medicat ion), then this single no -choice


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instance does not constitute a decision; such a no-choice is commonly referred toas a Hobsons choice.

In actuality, no-choice purchase or consumption situations are fairly rare. You mayrecall from our discussion of core American cultural values that for consumers,freedom is often expressed in terms of a wide range of product choices. Thus, if there is almost always a choice, then there is almost always an opportunity forconsumers to make decisions, Moreover, experimental research reveals thatproviding consumers with a choice when there was originally none can be a verygood business strategy, one that can substantially increase sales. For instance,when a direct-mail electrical appliance catalog displayed two coffeemakers insteadof just one (the original coffeemaker at $149 and a new only slightly larger one at$220 the addition of the second comparison coffeemaker seemed to stimulateconsumer evaluation that significantly increased the sales of the originalcoffeemaker.

CONCEPT AND NATURE OF DECISION MAKING

Decision-making is a managerial process of choosing a particular course of actionout several alternative courses for the purpose of achieving the given objective. Itinvolves committing the organisation and its resources to specific courses of actions. Managers at all levels in an organisation make decision--, and solveproblems. Problems arise when the actual state of affairs differs from the desiredstate of affairs-Sometimes, however, problems may give rise to opportunities.Thus; decision-making is the process uf reducing the gap between the existingsituation and the desired situation rough solving problems and making use of opportunities. A decision is a course of action consciously selected from availablealternatives to achieve a desired goal. It is e outcome of judgment and represents a

commitment.


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From the above description, the following characteristics of decision-making canidentified.

(i) Decision-making is an ongoing or continuous process. Management isperpetually a decision-making exercise.

(ii) Decision-making is a systematic process, an iterative, and recurring activity.

(iii) Decision-making involves commitment of resources.

(iv) Decision-making is an intellectual process. It involves imagination, reasoning,evaluation and judgment.

(v) Decision-making is situational. The nature and type of decision made varywith the environment. It may be a decision not to art. However, managers canlearn from past decisions.

(vi) Decision is a goal-oriented process. Decisions are made to achieve certaingoals. A decision is good to the extent it helps in attaining the desired goal.

(vii) Decision-making is a process of selection. Unless there are one or morealternatives no choice is possible.

(viii) There are several elements of decision-making.

(a) The decision-maker.

(b) The decision problem.(c) Objectives and values of the decision maker

(d) The environment in which the decision is to be made.

(e) The alternative courses of action and their estimated outcomes.

(f) The final choice.

(g) Decision-making is pervasive.


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PERVASIVENESS OF DECISION MAKING : -

Decision-making underlines the entire process or management because everyManagerial function involves decisions. even thing a manager; does. In the wordsof Peter Drucker, Whatever a manager does he does it through making decisionsand getting them implemented in an effective manner. The quality of decisionsreflects the competence and character of management and determines the successof the organisation.

Decision-making is an essential part of all the managerial process: Setting upgoals, formulating strategies, and policies, designing the organisation structure,motivation and leadership process, communication and control process and so on.Decision-making runs through all the managerial functions. There exists a closerelationship between the decisions made in various functions of management. Forexample, planning decisions affect control decisions and vice versa. Longrangeand company wide decisions provide the framework for making short term anddepartmental decisions. Table shows that each of the managerial functions hasseveral vital decisions associated with it.

Decision-making and problem solving are directly related with planning. Planninginvolves the most significant and far reaching decisions a manager can make. Inthe planning process, managers decide the goals to be pursued, what resources willbe used and what actions will be taken to achieve the goal. The entire planningprocess involves managers in a continual series of decision-making situations. Thequality of decisions will determine how effective the plans will be.

Managerial decisions provide the framework within which other employees maketheir decisions and act. Top managers make major decisions and delegate theauthority for making minor decisions to the middle and lower level managers. Topmanagement makes a decision-making system in the organization through

proper delegation of authority,

installation of a suitable information system, formulation of organizational policies and procedures, training subordinate managers to improve their decision-making skills, and creating organizational climate conducive to sound decision-making.


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EFFECTIVE DECISION MAKING PRINCIPLES

Some guidelines for effective decision-making are given below:

1. Set Decision :

Making Goals the decision-maker should define the goals he wants to attain bymaking a decision. Coal setting provides relevant criteria for the evaluation of alternatives and helps in identifying the sources of required information. Withoutsetting goals, the search for information will be inefficient and expensive.

2. If You Get Stuck Ask/or Help :

A useful technique to improve decision- making is to talk about the problem withsomeone else, especially where there is an impasse. Such an approach not onlyforces the manager to think more precisely about the problem but the other personmay provide valuable new insights into the potential decision.

3. Dont b e Afraid to Develop Innovative Alternatives :

Many managers fall into a rut because they develop alternatives on the basis of thelikelihood of their acceptance by higher management rather than their ability tosolve the problem. Managers should not be afraid of developing innovative ornovel alternatives. However, they should carefully think through the implicationsand consequences of each alterative sometimes supposedly minor consequences or

side effects of a decision are not given sufficient attention which may lead to a poor decision. Decisions need not always be a yes and no variety.

4. Be Problem Oriented not fist Solution Oriented:

Many managers become so attached to a particular decision aid or method thatthey either try to fit all problems to the model or they create problems in order touse the model. This is the case of the fail wagging the dog. Make sure you haveidentified the problem clearly before a choice of decision aid is made.

5. Marshall the Facts :

The decision-maker should keep his eyes and ears open in order to anticipateproblems and to collect all relevant information. Wherever necessary new sourcesof information should be developed. The decision- maker should not accept othersopinions without checking their validity] The sources and accuracy of informationshould be verified.


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6. Gain Commitment for A Decision :

Managers must not assume that a decision will be accepted by others in the

organisation without some preliminary work. Unless the matter is confidential, itwould be wise to discuss your views with others, seek out their views and topinpoint sources of support and possible resistance. Mere communication andexplanation of the decision is not enough. Implementation of the decision shouldbe delegated wisely. Delegation is one way to get people involved and committedto a decision. When employees are made to feel a part of a decision, they maynaturally want to put out extra effort to ensure the effectiveness of the decision.

7. Evaluate and Follow-up the Decision :

Many well-thought and implemented decisions fail due to lack of follow-up by themanager. The lack of evaluation may signal to employees that the manager has lostinterest in the matter. The attention, effort and recognition which are important by-products of follow-up are essential elements of effective decision- making. Dontbe Too Hastyin Making Decisions: The result oriented manager assumes thatdecisions must be made quickly in order to be effective. This desire to make aquick decision pushes many managers into poor decisions that could be avoided if Bore time were spent identifying the problem and evaluating alternatives.

However, reasonably good decisions taken in time may be better than finding theideal solution after a great delay. A sense of timing is necessary to make gooddecisions.

8. Maintain Flexibility :

Good decision-makers do not persist in one approach but are ready to change theirapproach to get an acceptable solution. They are not creatures of habit and keeptheir mind open for new ways to see and solve the problem. It is necessary to keepthe mind open for new relationships or new combinations. Management is more anart than a science and, therefore, there is nothing wrong in using commonsense.


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DECISION MAKING APPROACHES

1. Quantitative Approach: In quantitative approach, the quantity in the alternativesare reviewed, and evaluate that means what are included in the alternatives.

2.

Decision centered Approach: In this approach it is decision centered. The mainaspect is an taking decision and not other relevant.

3. Managerial Role approach: Approach on managerial function Planning,Organizing, Staffing, Directing, Controlling that mean decision making onthese managerial function.

APPLICATION OF DECISION MAKING CONCEPT MODEL

1. It supports different type of decisions:

Information use can be classified into three types.a. Structured information

b. Semi-structured information.

c. Unstructured information.

2. MIS supports the decision maker in different phases of decision making:

Intelligence, Design, Choice & Implementation

3. Relevant of Models - 4 levels of Relevant, 4 basic model for making decision:

4. Quality of the decision- MIS improve the quality of the decision this is notalways true. MIS not improve but only help. Capabilities of MIS:

a. MIS can consider a wide range of alternatives at the same time.

b. All the parameters can be considered.

c. Weightage to different parameters.

d. Accumulation (correct & exact) of new information can be made.

e. Re-examining the alternatives in view of new information

f. It does not bored.


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TYPES OF DECISION MAKING

The type of decision making and information required by managers is directlyrelated to their level of management and the structure of decision situations theyface.

In the day today functioning of an organisation managers make several types of decisions.

The various types of managerial decisions can be classified as follows-

1. Programmed (Structured) and Non-Programmed (Unstructured) Decisions:

Herbert Simon has classified managerial decisions as programmed decisions andnon-programmed decisions. Programmed decisions mean decisions made byreference to a predetermined set of procedures, rules, precedents and techniques.

These decisions are well structured in advance and tend to be consistent oversituations and time. Whenever a problem or issue for decision-making arises, therelevant predefined procedure or rule is applied to arrive at the decision. Forexample, there is a set procedure for purchase of materials payment of bills andrecruitment of clerical staff in most organisations. Programmed decisions are madefor routine and recurring problems which need a structured solution by application


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of known and well defined operating procedures and processes. Such problems donot. require much judgment and discretion on the part of managers. Decision rulesand procedures for tackling such problems are formulated in advance to reducetime and effort. Decisions relating to complex problems such as allocation of

resources could also be programmed with the help of sophisticated mathematicaland statistical techniques and computers.

Structured decisions (also called programmable decision ) involve situationswhere the procedures to follow when a decision is needed be specified in advance.Therefore, such decisions are structured or programmed by the decisionprocedures, or decision rules, developed for them. A structured decision mayinvolve what is known as a deterministic, or algorithmic, decision. In this case adecisions out come can be determined with certainty if a specified sequence of

activities (an algorithm) is performed or a structured decision may involve aprobabilistic decision situation. In this case enough probabilities about possibleoutcomes are known that a decision can be statistically determined with anacceptable probability of success. The information systems can support structureddecisions is by quantifying and automating a 1ecision-making process.

Non-programmed decisions are made for novel and non-repetitive problems.Adequate information and knowledge are not available for such problems.Therefore, decisions cannot be made by reference to any predetermined guidelines,standard operating procedures or rules and precedents. Such problems ariseinfrequently and are unstructured. They require unique or unusual solutions. Asolution has to be specific to the particular problem and therefore, a high degree of executive judgment is required. A major change in Government policy about theindustry, stiff competition from an unknown rival, sudden departure of the chief executive are examples of non programmed decisions.

Unstructured decisions (also called nonprogrammable decisions ) involvedecision situation where it is, not possible or desirable to specify in advance mostof the decision procedures to follow. Many decision situ in the real world areunstructured because they, Are sub lect to too many random or changeable eventsor involve too many unknown factors or relationships.

At most, many decision situation are semi structured . That is, some decisionprocedures can be prespecified, but not enough to lead to a definite recommended


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decision. Decisions involved in starting a new line of products or making majorchanges to employee benefits would probably range from. unstructured to semistructured. The many unknown or changeable factors involved would require aless-structured approach leading to subjective judgments by managers, Information

systems can support such decisions by providing(1) the ability to make ad hoc .inquiries for information in company data bases and

(2) ability to reach a decision in an interactive process using a decision supportsystem.

2-Strategic and Tactical Decisions:

According to H.I. Ansoff decisions can be classified as strategic and tacticaldecisions. Strategic or policy decisions involve long term and major commitmentsand arc critical to the survival and success of the organisation. They exercise a vitalinfluence on the direction and functioning of the enterprise. Location of a newplant, launching a new product, adoption of new technology, acquisition On of a


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running enterprise are examples of strategic decisions. Considerable analysis and judgment is required for such decisions. They are generally made at the top level of management. Strategic decisions just like non-programmed decisions are madeunder conditions of partial ignorance.

Tactical or operational decisions are made to implement strategic decision. Aseries of tactical decisions may be required to implement one strategic decision.Tactical decisions are concerned with maximising the performance of existingoperations. They involve short term commitments and exercise a minor influenceon the future of the organisation. Tactical decisions are more specific andfunctional than strategic decisions. These decisions arc made under an environmentwhich is less complex and less uncertain. For example, if the top management havedecided to launch a new product, decisions concerning the name, package, price,

promotion of the new product are tactical decisions. Such decisions require lesseranalysis and judgment and are made at middle and lower levels of management.

3. Individual and Group Decisions:

At different levels of management, individual managers are given the authority tomake a large number of decisions. They assume full responsibility for theconsequences of such decisions. They are supplied with the [ information and

resources for this purpose.When-two or more managers jointly take decisions and assume collectiveresponsibility these are known as group decisions. At the top level, the Board of Directors stability strategy decisions as a plural executive body. At middle andlower levels, there exists several committees which take decisions on severalmatters relating to the functioning of the Organisation. In addition to these formalgroups, managers at any level may informally involve their colleagues andsubordinates in the decision-making process.

Group decision-making is considered to be better than individual decision makingin several ways. There is pooling of knowledge and experience of differentindividuals. Group deliberation and analysis is likely to improve the quality of decisions. Decisions of interdepartmental nature can better be made by a group of managers representing the concerned departments than by a single manager. Groupdecisions are easier to implement due to their wider acceptance and pragmatic


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nature. It is more advisable to entrust a high degree of decision-making authority toa group than to an individual. Group decision-making, however, suffers from somedrawbacks. Decisions are likely to get delayed. Compromise and conformityamong group members may dilute the quality of decisions. Responsibility for the

consequences of decisions is diluted among group members.


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DECISION MAKING TOOLS & TECHNIQUES

Traditional Techniques for Making Programmed Decisions:1. Habits : Managers often attempt to solve routine and repetitive problems throughestablished habits. These habits are developed through experience and learning.Use of habit in decision-making does not require conscious thinking because habitsserve as set responses to problems.

2. Standard Operating Procedures: Every organisation develops standardprocedures to guide managerial decision-making. These serve as decision criteriaand are meant for ensuring consistency in managerial decisions. They are moreformal than habits and can be modified whenever necessary.

3. Organisational Structure: Organisational structure is a network of authorityand activity relationships. It tells managers what is expected of them, to whom theyare accountable and from whom to get resources and information. It also providesflows for authority and information. Organisational structure is a traditionalsystematic technique of decision-making.

Traditional Techniques for making Non-programmed Decisions:

In case of novel and non repetitive problems, no precedents are available and eachproblem needs to be solved in an unique manner. Traditionally managers haverelied to their intuition, hunch and judgment for making non-programmeddecisions. These are personal qualities rather than techniques. These are howeverindispensable and all the modern techniques of decision-making are used toreinforce intuition and judgment or to partially replace them.

Modern Techniques for Making Decisions:

Several quantitative techniques are now available for making decisions on routinebut examples problems. These techniques are based on scientific method whichconsists of the following elements:

(a) statement of clear objectives

(b) definition of the problem,


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(c) formulation of hypotheses.

(d) collection of facts,

(e) testing the hypotheses,

(f) explanation of results.Modem techniques are meant to assist manager in making sound decisions forefficient utilisation of scarce resources. These techniques are collectively known asOperations Research which has emerged as a separate discipline. Operationsresearch is denned as the application of scientific methods, and techniques toproblems relating to the operation of systems so as to facilitate optimal solutions tocomplex problems. The basic tool used in operations research techniques ismathematical modeling. It means the construction and use of a symbolic model

which represent the key variables of a problem in mathematical terms. Thevariables are quantified and relationships between them are expressed throughmathematical equations. A relevant mathematical technique is applied to the modelto arrive at the solution to a problem. High speed electronic computers can be usedfor data processing. Quantitative techniques are used to solve complex problemsconcerning plant capacity allocation and utilising, inventory control, product mix,production scheduling, capital budgeting etc.

Some of the quantitative techniques are as follows : -

1. Linear Programming :

It is the technique for optimisation of an objective function with the given servicesand constraints. The objective function may be maximization of gain orminimisation of cost. The technique is useful under conditions of certainty.

2. Probability Decision :

Theory This theory is based on the premise that future is uncertain. On the basis of available information and subjective judgement various probabilities are assignedto alternative courses of action. The likely outcomes of different alternative areevaluated and the most promising alternative is selected Payoff matrix and decisiontree are constructed to represent the variables.


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3. Payoff Matrix :

Decision-making involves choosing die best out of two or more alternatives.

Payoff matrix is a statistical technique that helps managers in making the choice. Itis particularly useful for determining which strategy is most likely to make thegreatest overall contribution to the attainment of objectives. A payoff represents amonetary reward or utility that is a consequence of specific strategy in conjunctionwith a given state of nature. When payoffs are arranged in the form of a table weget a matrix. The payoff is contingent upon the occurrence of a certain event.Therefore, it is necessary to reasonably determine the probability of occurrenceand to compute the expected value bf the payoff. The expected value of analternative or strategy is the sum of conditional values multiplied by theirrespective probabilities.

4. Decision Tree :Decision tree is an extension of payoff matrix. Payoff matrix is used for makingnon sequential decisions whereas decision tree can also be used for makingsequential decisions in which the outcome of a decision affects later decisions.With the help of a decision tree the impact of choice in one time period upon

succeeding time periods can be estimated.A decision tree is a schematicrepresentative of a decision situation. Like the payoff matrix it allows a manager toconsider various them, modify these results by their probability and then makecomparisons.

5. Game Theory :In competitive revalry or conflict, two or more competitors are involved in a game

of gaining at the expense of each other. Game theory is useful in determining the

factors to be considered in a competitive situation. There are zero sum and nonzero sum games.

6. Queuing (Waiting Line) Theory :This technique is useful for determining the optimum number of service facilitiesin situations like airline reservation, railway booking counters, equipment waiting


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for repairs, data waiting for computer processing, bank customers waiting for cashreceipts and payments, trucks waiting to unload at a warehouse, etc. Thefundamental problem in a waiting line is to balance the costs of additional facilitiesagainst the cost of waiting for service, For instance, bank office where customers

have to wait too long may feat that customers may decide to do business in otherbanks. In order to prevent loss of business it may decide to open more counters.The length of a line waiting to pass through a service facility depends on the rate of arrival and the rate of service. If the rate at which customers arrive exceeds thespeed at which they are served a queue will develop. Service facilities fall short of the demand for facilities due to variations in the time required to provide theservice as well as in the rate at which customers arrive for service. These variationslead to idle capacity at some point in time and waiting lines at other times.

Queuing theory analysis help to reduce the costs involved in idle capacity as wellas in waiting lines.

7. Network Techniques :

Programme Evaluation and Review Technique (PERT) and Critical Path Method(CPM) are two important network techniques used for project planning andcontrol. Complex projects involve considerable time and cost. Network techniquesare used to minimise both time and cost. A network diagram is prepared in detail toidentify the activities required for completion of a project, to assess theirinterrelation and to estimate the probable time and cost of their completionManagements attention is focused on the critical path.

Modern Techniques for Making Non-programmed Decisions:

1. Creativity Techniques :

Solution of novel and non-routine problems requires creative thinking. Creativitymeans the ability to generate new ideas and new ways of doing things.Brainstorming, Delphi, synaptic and techniques are used to develop creativity.Brainstorming is a group based technique. Members of a group are encouraged tothink of all possible alternatives to a problem. The ideas may be wild orimpractical but they may ultimately suggest a creative solution to the criticalproblems.


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2. Participative Techniques :

Participation of employees in decision-making is helpful in improving the qualityof decisions. It results in more acceptable and timely decisions. Employees feelcommitted and responsible for implementation of decisions in which they havebeen involved.

3. Heuristic Techniques : Decision-making is complex and cannot always berational and systematic. Uncertain environment, lack of information, conflictinggoals and perverse human nature make it sporadic and fragmented. Therefore,certain rules of technique for solving complex problems.

Figure: Examples of decisions by the type of decision structure and by

Level of management.

STEPS IN DECISION MAKING PROCESS :-

Decision-making maxims will help to reinforce the above decision-making processwhether related to problem- solving or not.We know what happens to people whostay in the middle of the road. They get run down. (Aneurin Bevan)

In any moment of decisio n the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.

The Goal of the Decision-making Process

The goal of making decisions is to:


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Achieve some desired objective(s); and, Avoid negative, unintended consequences.

Few decisions can provide all of the desired objectives and no unintended

consequences. A good decision, however, provides the most desired objectiveswith the fewest negative tradeoffs. Historians, psychologists, and managementscience specialists have studied and formalized decision-making processes thatincrease the likelihood of making good decisions.

Identify the roles of different people:

Decision-makers : are responsible for deciding what objectives should beemphasized where tradeoffs among values are needed. On private lands,decision- makers are the landowners or their designees. In the case of public

lands, the decision-makers are the appropriate elected officials or theirdesignees.

Analysts : are professionals, scientists, or other specialists who analyze theeffect of each alternative management action on each objective. The analystsrole is advisory and is best performed if the analyst does not- exhibit apreference for certain objectives or alternatives. It is helpful if forest managerswork closely with the analysts, to ensure that the alternatives are operationallyfeasible.

Stakeholders : are those who have an interest in some possible objectives, butdo not have a legal ownership and are not designated as analysts. Stakeholderscould include people who purchase or otherwise use the goods and servicesprovided by the land or adjacent lands.

Process managers : are specialists in the decision-making process. They directthe process and Censure that it is followed correctly; however, they remainindifferent to the outcome or the chosen alternative.

Forest managers : are responsible for implementing the chosen alternative.Their input during scoping and other steps is helpful and their understanding of the nuances of discussions during the decision-making process helps theirmanagement ability.

Each of these groups plays designated roles in the decision-making process. Forlarge scale decisions, different people or groups of people fill each role. For


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smaller scale decisions, often a single person or group can assume several roles.Where a person assumes several roles, it is important that he/she understands thedifferences in functions of each role being assumed.

Scope the target area:

managers, decision-makers, analysts, stakeholders, and forest managers can contribute to this step.

The area to be managed is studied relative to its area, productivity, species

composition, age class distribution, special features, concerns, and other factors.Scoping is done both by examining existing information about the area and byvisiting the area. The purpose of scoping is to develop an understanding of thesystem, its inputs and outputs, the component elements and the interactions amongdifferent groups of elements.

Steps in Decision Making Process:

Decision-making is a process consisting of a logical sequence of interrelated steps.These steps are given below:


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1. Identification Phase :

The decision-making process begins with managerial recognition that decisions arerequired on some important problem or issue. Managers identify the decision

situations with the help of the information which they continuously receive on theinternal and external environment of the organisation? These situations may relateto problems, crises and opportunities. Managers require foresight and intelligenceto understand the problem quickly and to take decisions in time it is essential torecognise the crisis and to respond to them promptly as otherwise they may be outof control. Effective managers identify the opportunities early and initiate action totake advantage of them Decision-making.

Identify your Options Gather information on your options and yourself

Several important considerations of measurable criteria are described below:

Time period :

Forest management is usually planned over an extended period, such as 50 or100 years. It is expected that the forest plan will be revisited and improvedwith each management cycle (e.g., 5 or 10 years).

Positive terms :

Communication of measurable criteria is most effective if objectives areexpressed in positive terms, such that higher values of the measurable criteriaindicate a more desirable condition.

Summary values :

The measurable criterion for each objective is represented by a summary valuefor ease of comparison among management alternatives. Summary values

allow decision-makers and stakeholders to begin developing an understandingof the consequences of different alternatives without being overwhelmed bythe complexities of the analyses. The iterative process allows the analyst toshow the more complex numbers leading to the summary value as they rerequested. A summary value can be an average of the values for each


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management cycle during the planning period or it can be defined to includenonlinear or threshold conditions.

1. Identification phase :

Problem definition and diagnosis problem well denned is half solved. A problemmay be defined in terms of the gap between the actual and desired states or as anopportunity to improve rather than restore organisational performance. Mostproblems consist of several elements which are interrelated. It is, therefore,necessary to identify various elements of the problem, its relation to the goals of the organisation, relation with other problems and previous decisions, etc.Once theproblem is defined, its correct diagnosis is necessary. Diagnosis involvesidentifying the sources of the problem and factors bearing on it. It is necessary todistinguish the symptoms from the causes. For instance, high labour turnover maybe a symptom rather than the problem. In order to find the causes of a problem, itis essential to collect and analyse information pertinent to the problem. Theinformation must be relevant, accurate and timely.

2. Development Phase :

This is a search process involving much time and effort. After problemidentification and diagnosis, the decision-maker must consider what can be doneabout the problem. Many possible solutions to organisational problems are notrealistic due to lack of necessary resources or due to external forces which themanager cannot change. These limitations on corrective action impose constraintson the decision-maker. It is necessary to identify constraints and decision criteriaotherwise time and effort may be wasted on unrealistic courses of action. Decisioncriteria are the standards against which alternative choices can be measured. Theseare guidelines it on how the decision will be evaluated or what constitutes aneffective solution to the problem. For example, in making investment decisions, an

investor might establish criteria such as the minimum return should be 20 percentand the maximum risk should not exceed 25 percent of investment.


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Develop a wide, creative range of alternatives:

It is important to obtain as wide a range of alternatives for several reasons:

to determine the compatibility of different objectives;

to give the decision-makers a wide range of alternatives with different tradeoffs; to seek alternatives that fulfill as many of the objectives as possible, while

having the fewest negative consequences.

Several important considerations should be made when developing the rangeof alternatives:

Number of alternatives: A limited number of alternatives (e.g., 10) should be

analyzed and presented to the decision-maker. These alternatives should span aswide a range of management scenarios as possible. (If decision-makers areinterested in an alternative that is intermediate between two or more of thosepresented, they can request it as they narrow their preference of alternatives.)

Standard alternatives: In addition to a creative range of alternatives, severalstandard alternatives can be presented and analyzed. These alternatives helpThound the extremes of management alternatives.

Naming alternatives : Value-neutral names (e.g., Alternative A, Alternative B)should be used. This will help decision-makers and stakeholders focus on theconsequences of the alternatives.

Decision criteria provide an idea of the ideal choice which perfectly meets therequirements of the decision-maker. He develops a set of alternative solutions tothe problem which are feasible and nearer to his ideal. No major decision should bemade .until several alternatives are developed. Creativity and imagination arerequired to develop alternative courses of action. It is necessary to resist thetemptation of accepting the first feasible alternative and the inclination to appraisealternatives as they are developed. Evaluation at this stage is premature. Ideally;one should identify all possible options that could solve the problem. However, inpractice managers do not have the time or knowledge to formulate alternatives.Managers usually limit the number of choices to the most, desirable ones. Caremust however be taken to consider reasonably wide range of alternatives including


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the possibility of no action. This helps to assure in depth analysis of the problemand increases the managers freedom choice. The range of alternatives should bewithin manageable limit. All alternatives this stage are tentative and potentiallyrelevant.

3. Selection Phase :

Evaluate Options Use one or more of the evaluation techniques described overleaf.If it helps, discuss your options with another person e.g. a Careers Consultant.Once a feasible range of alternative courses is developed, the next age is to screenand evaluate each alternative/Effectiveness of an alternative can be measured interms of how realistic it is in terms of the goals and resources of the organisationand how will it help to solve the problem? The positive and negative consequencesof each alternative are judged. Both quantitative and qualitative evaluation isnecessary to ensure that all relevant factors are taken into account. The predictedoutcomes of each alternative are measured in terms of the decision criteriaestablished earlier. Evaluation is a process of trade off wherein expected benefitsare to be balanced against possible adverse consequence. No alternative is perfectand therefore, the decision-maker may rank the alternatives in terms of theirsoundness.

Many, creative, teaching aids can be used to give the decision-makers anunderstanding of the alternatives and their consequences. These aids can include:

Matrices Graphs Visualization (Stand and Landscape Scale)

The iterative approach allows the decision-makers to request additional or furtherclarification of objectives, measurable criteria, alternatives, and analyses. Suchadditional input, and consequent delay, is minimized if the analysts keep thedecision- makers informed of each of the steps described above.

Choose an alternative :

On the information you have gathered and analysed, select the best option. If youdo not have enough information to choose one option over another, you may needto do more research. You may wish to identify your best alternatives too: your PlanA, B and C.


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[ decision. maker is responsible for the choice of an alternative, but may delegatedecision-making authority to stakeholders, analysts or others.] When the decision-makers are satisfied with the alternatives and analyses, they choose onemanagement alternative for implementation. It is not possible to choose more than

one alternative, and delaying a decision is a temporary choice of the No Actionalternative. The decision-maker is free to choose any alternative; however, thechoice of alternatives reveals the importance the decision-maker places on variousobjectives.

After evaluation and comparison of different alternatives, the best alternative isselected. It is the alternatives that will meet the requirements of the problemsituation better than any other alternative. Good judgment and experience arenecessary as in many cases no alternative may stand out clearly as the best choice.

4. Implementation Phase :

Make a Plan and Implement the Decision Identify what information or resourcesyou need to follow through on your decision. Identify possible obstacles toimplementing your decision and plan to overcome them. Try not to worry aboutyour decision: if you have fully assessed the situation and all possible outcomes,you have nothing to fear. Whichever option you take, there will be benefits: newexperiences, opportunities to find out more about who you are and what you want.

Review the Decision :Reflect on how you made your decision and how successful the outcome was.Think about how you can use what you learned when making future decisions. Thechosen alternative is turned over to the forest manager for implementation,monitoring, and feedback. [ this time, the forest manager becomes directlyresponsible to the decision-makers for implementing the chosen alternative.]Monitoring and feedback (Continuous Quality Improvement and/or AdaptiveManagement)

The decision-making process not end when an alternative is chosen. Merelyselecting a course of action is of little value to organisation. To resolve a problemor to take advantage of an opportunity, the decision must be implemented. Adecision is no better than the action taken to make it a reality. Implementationrequires communicating the decision and gaining acceptance of people. A goodway to win acceptance of decision is to involve others in the decision-making


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process. After gaining acceptance, resources are acquired and allocated. Budgetsand schedules for the actions are prepared. Responsibilities for the specific tasksare assigned. A procedure for regular feedback on the progress is set up. Actionstaken to implement the decision are continually monitored. Such monitoring and

feedback enables managers to evaluate the effectiveness of decisions. Wherevernecessary steps are taken to make the decision effective. Such steps may includeeliminating hurdles in implementation, minimizing adverse consequences andrevising the decision itself.

Herbert Simon has identified the following stages in decision-making:

i Intelligence activity-identification and diagnosis of the problem situation

ii. Design activity-generation and evaluation of alternative courses of action

iii. Choice activity-selection of the best course of action.

DECISION MAKING STYLE & METHOD

According to behaviorlist Isabel Briggs Myers, a persons decision making processdepends to a significant degree on their cognitive style. Myers developed a set of four bi-polar dimensions, called the Myers-Briggs Type Indicator (MIBTI). Theterminal points on these dimensions are: thinking and feeling; extroversion and

introversion; judgement and perception; and sensing and intuition. She claimedthat a persons decision making style is based largely on how they score on thesefour dimensions. For example, someone who scored near the thinking,extroversion, sensing, and judgement ends of the dimensions would tend to have alogical, analytical, objective, critical, and empirical decision making style.Martinsons has found that American, Japanese and Chinese business leaders eachexhibit a distinctive national style of decision making Other studies suggest thatthese national or cross-cultural differences exist across entire societies.

Decision mapping enables one to illustrate visually the influences of heuristics andbias on human decision making in contexts of risk and uncertainty. Facione andFacione (2007) describes the theory, technique, and application of this newanalytical methodology. Among other things it shows how to construct decisionmaps from oral and textual expressions of individual or group decisions. A&HMethod decision maps illustrate the combinination of reasons-claim argument


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strands as well as the influences of cognitive heuristics and psychologicaldominance structuring which emerge from those data. Researchers can comparedecision maps illustrating how many different people have made a decision aboutthe same question (e.g. Should I have a doctor look at this troubling breast cancer

symptom Ive discovered. Why did I ignore the evidence that the project wasgoing over budget?) and then craft potential cognitive interventions aimed atimproving decision making outcomes.

Below is a list of some of the more commonly debated cognitive biases:

Selective search for evidence (a.k.a Confirmation bias in psychology) (Pious,1993) - We tend to be willing to gather facts that support certain conclusionsbut disregard other facts that support different conclusions.

Premature termination of search for evidence - We tend to accept the firstalternative that looks like it might work. Inertia - Unwillingness to change thought patterns that we have used in the past

in the face of new circumstances. Contrariness or rebelliousness - Unwillingness to share a view with a perceived

oppressive authority.

Experiential limitations - Unwillingness or inability to look beyond the scope of our past experiences; rejection of the unfamiliar.

Selective perception - We actively screen-out information that we do not think is salient. (See prejudice.)

Wishful thinking or optimism - We tend to want to see things in a positive lightand this can distort our perception and thinking.

Choice- supportive bias occurs when we distort our memories of chosen andrejected options to make the chosen options s more attractive.

Recency - We tend to place more attention on more recent information andeither ignore or forget more distant information. (See semantic priming.)Theopposite effect in the first set of data or other information is termed Primacyeffect (Plous, 1993)

Repetition bias - A willingness to believe what we have been told most oftenand by the greatest number of different of sources.


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PROS AND CONS DECISION -MAKING METHOD:

Another simple process for decision- making is the pros and cons list:

Some decisions are a simple matter of whether to make a change or not, such as

moving, taking a new job, or buying something, selling something, replacingsomething, etc. Other decisions involve number of options, and are concernedmore with how to do something, involving a number of choices. Use thebrainstorming process to identify and develop options for decision-making andproblem-solving.

1. First you will need a separate sheet for each identified option.

2. On each sheet write clearly the option concerned, and then beneath it theheadings pros and cons (or advantages and disadvantages, or simply for

and against). Many decisions simply involve the choice of whether to go aheador not, to change or not; in these cases you need oniy one sheet.

3. Then write down as many effects and implications of the particular option thatyou (and others if appropriate) can think of, placing each in the relevant column.

4. If helpful weight each factor, by giving it a score out of three or five points(eg., 5 being extremely significant, and 1 being of minor significance).


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On the basis of the pros and cons, and the weighting applied, in the aboveexample theres a clear overall quantifiable benefit attached to the decision to goahead and buy a new car. Notice that its even possible to include intangibleemotional issue s in the pros and cons comparison.


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DECISION MAKING BEHAVIOUR MODELS

1. Normative Model : Rationality and Economic Man: This model is based onclassical economic theory. According to this theory the economic man is motivatedby self- interest and seeks to maximise economic gain. He is a perfectly rationaldecision- maker. He has access to full information and is competent enough tomake the optimum decision.

A managers decision -making behavior as an economic man is characterised by thefollowing:

I). He is systematic and logical in his thinking.

ii). He is very objective and never allows emotions and non-economic factors toinfluence his judgment.

iii). He is knowledgeable, possesses full information and knows the consequencesof different alternatives.

iv). He is competent enough to analyse the information in an intelligent manner.

v). He has clear goals and knows his priorities very well so as to maximise hisgain.

vi). He chooses appropriate ways and means to reach his goals.

The normal model is idealistic and prescriptive. It tells how decisions should bemade and how managers should behave as decision-makers. The rational decisionmaker operates in a relatively closed system by making simplifying assumptionsabout the decision-making situation and by ignoring the facts which cannot bequantified,

2. Behavioural Model: Bounded Rationality and Administrative Man Accordingto Herbert Simon normative model is idealistic as managers cannot be completelyrational decision- makers in real life. Rationality in decision-making is restricteddue to several constraints or limitations. Simon introduced the concept of boundednationality to describe the actual behaviour of decision-makers.

1. Rational Economic Model: The decision based or rational based logical basedour economic game.


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2. Satisfying Administrative Models: That is against rational decision maker moreeconomic but this model the decision maker are administrative. It is asatisfactory decision satisfy many people.

3. Psycological Model: Psycological Model based on assumption the human beingwants to maximize your gain and minimise the loss.

4. Organization Decision Model:

5. Burocratic Model: Government decision, Cost consuming and Time limit.

6. Political Model: Negotion between loss and benefits (bargaining) betweenparties General agreement on a larger objectives this model is not analyticaleffect on the lowest operative is Considered.

7. Incremental Model: In Incremental Model the decision are net sequential,incremental step, Implemental model the minimization of reactive.

8. Garbage Model: Garbage Model the Generally the decision emergencyautomatically outcome, Urgently and if the decision is wrong then it will autocorrected. It is the sociological aspect.

GROUP DECISION-MAKING

GROUP DECISION-MAKING

Decision-making is an act of choice wherein an individual or a group selects aparticular course of action from the available alternatives in a given situation. Thebasic characteristics of the decision -making process are as follows:

It is a human process involving to a great extent the application of intellectualabilities.

It is a process of choosing a course of action from among the alternative coursesof action.

Decision-making in business is always related to certain objectives, It is the end process preceded by deliberation and reasoning. It is always related to a situation. A manager may take one decision in aparticular set of circumstances and another in a different set of circumstances.

It involves some commitment, may be even for a short period,


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Decision-making is at the core of managerial planning. It involves establishinggoals, dinning tasks, searching for alternatives an choice of the best alternative. Inan organisation, decision-making may be carried out .by both individuals andgroups. In modern organisations facing the environmental uncertainties, group

decision-making has become almost indispensable.MERITS OF GROUP DECISION-MAKING:

Group decisions are likely to be implemented effectively. The group memberswho have participated in taking the decision jointly are supposed to lend fullsupport to the decision because of their greater commitment to the decision.

Group decision-making can be used as a training ground for new members tolearn decision-making and communication skills. Thus, it can serve as an

instrument of human resource development The knowledge base of the group is greater which can help in taking betterdecisions. The group members may ha different specialities as in case of cross-functional teams.

The input from the members of the group can eliminate the biases that aregenerally introduced in the process of individual decision-making. It alsoreduces the unreliability of individuaPs decisions.

The group format allows participation of group members in the decision makingprocess. This can lead to better decisions besides providing satisfaction to theparticipants.

DANGERS OF GROUP DECISION-MAKING:

A group may take a decision that is simply a compromise between the variousviews held by the individual method

Group decision-making is a time-consuming process. Usually, a group takesmore time in reaching a decision since there are many opinions to be takeninto consideration.

Group decision- making may be affected by the problem of group. Think.Under this, the desire of the group members for complete consensus mayoverride their motivation to disagree with an alternative or to evaluate otheravailable alternative.


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Group decision making may prove to be more risky than individual. Decisionmaking since it is a collective decision the group may be tempted to take morethan warranted by the situation.

PROBLEM SOLVING IN DECISION MAKING

Simple process for Problem-solving and Decision-making:

Problem solving and decision-making are important skills for business and life.Problem-solving often involves decision-making, and decision-making isespecially important for management and leadership; There are processes andtechniques to improve decision-making and the quality of decisions. Decision-making is more natural to certain personalities, so these people should focus moreon improving the quality of their decisions. People that are less natural decision-

makers are often able to make quality assessments, but then need to be moredecisive in acting upon the assessments made. Problem-solving and decision-making are closely linked, and each requires creativity in identifying anddeveloping options, for which the brainstorming technique is particularly usefuland the free SWOT analysis template and examples, and PEST analysis template,which help decision-making and problem-solving. SWOT analysis helps assess thestrength of a company, a business proposition or idea; PEST analysis helps toassess the potential and suitability of a market. Good decision-making requires amixture of skills:

creative development and identification of options, clarity of judgment, firmness of decision, and effective implementation. For group problem-solving and decision-making, or when a consensus is required, workshops help, within which you canincorporate these tools and process as appropriate. Here are some useful methodsfor effective decision- making and problem-solving: First a simple step-by-stepprocess for effective decision- making and problem-solving.

FOUR PSYCHOLOGICAL TYPES OF DECISION MAKERS

a) Intuitive: led by intuition; concentrate on the possibilities; avoid the details andtend to look at the bigger picture.

b) Thinkers: are analytical, precise, and logical; process a lot of information, oftenignoring the emotional or feeling aspects.


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c) Feelers: are interested in the feelings of others; dislike intellectual analysis andfollow their own likes and dislikes; enjoy working with people and are capableof great loyalty.

d) Sensors: see things as they are ; have great respect for facts; have an enormouscapacity for detail and seldom make errors; are good at putting things incontext.

DECISION MAKERS & INFLUENCER

In the context of industrial goods marketing, there is much theory, and even moreopinion, expressed about how the various ?decision and influencers (those whocan only influence, not decide, the final decision) interact. Decisions are frequentlytaken by groups, rather than individuals, and the official buyer often does not have

authority to make the decision.DECISION MAKING IN DIFFERENT AREAS

Decision making in business and management:

In general, business and management systems should be set up to allow decisionmaking at the lowest possible level. Several decision making models or practicesfor business include:

SWOT Analysis - Evaluation by the decision making individual or

organization of Strengths, Weaknesses, Opportunities and Threats with respectto desired end state or objective.

Analytic Hierarchy Process - procedure for multi-level goal hierarchy. Buyer decision processes - transaction before, during; and after a purchase. Complex systems - common behavioral and structural features that can be

modeled.

Corporate finance

The investment decision

The financing decision The dividend decision working capital management decisions


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Cost-benefit analysis - process of weighing th total expected costs vs. the totalexpected benefits.

Control- Ethics, a decision making framework that balances the tensions of accountability and best outcome.

Decision trees:

-Program Evaluation and Review Technique (PERT)

-critical path analysis

-critical chain analysis

Force field analysis - analyzing forces that either drive or hinder movementtoward a goal.

Grid Analysis - analysis done by comparing the weighted averages of rankedcriteria to options. A way of comparing both objective and subjective data.

Hope and fear (or colloquially greed and fear) as emotions that motivatebusiness and financial players, and often bear a higher weight that the rationalanalysis of fundamentals, as discovered by neuro economics research.

Linear programming - optimization problems in which the objective functionand the constraints are all linear.

Mm-max criterion. Model (economics)- theoretical construct of economic processes of variables

and their relationships. Monte Carlo method - class of computational algorithms for simulating

systems. Morphological analysis - all possible solutions to a multi-dimensional problem

complex optimization -constrained optimization. Paired Comparison Analysis - paired choice analysis. Pareto Analysis - selection of a limited of number of tasks that produce

significant overall effect. Robust decision - making the best possible choice when information is

incomplete, uncertain, evolving and inconsistent. Satisfying - In decision-making, satisfying explains the tendency to select

the first option that meets a given need or select the option that seems toaddress most needs rather than the optimal solution.


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Scenario analysis - process of analyzing possible future events. Six Thinking Hats - symbolic process for parallel thinking. Strategic planning process - applying the objectives, SWOTs, strategies,

programs process.Decision Making & Information System (MIS):

Management Information System (MIS) is the system of organising theinformation networks and flows within the organisation. It invol.ves systematicgeneration of information from, both internal and external sources. MIS is meantfor assisting managers in their decision-making function and not s a substitute formanagerial system.

Information is the basic input for decision-making. The quality and timeliness of information determines the effectiveness of decision-making. It is for this reasonthat decision-making is sometimes considered as the .processing and conversion of information into action. Information is required at almost every stage of thedecision- making process. Information helps managers in defining and diagnosingthe problem, in developing and evaluating alternative courses of action and inselecting. the best alternative. However, info is not a substitute for managerialskills and judgment in decision-making.

The most widely used model of the decision-making process was developed byHerbert A. Simon, a Nobel Prize-winning economist and scholar of managementdecision making. His model is a conceptual framework that divides the decision-making process into intelligence, design, and choice activities [ Other researchershave emphasized that since managerial decision making is typically a problem-solving, the implementation decision is as important to its success as the steps thatlead up to making it [ Therefore, we can use a model of decision making thatconsists of four stages:

1. Intelligence activities: Search the environment and identify events andconditions requiring decisions.

2. Design activities: Develop and evaluate possible courses of action.

3. Choice activities: Select a particular course of action.

4. Implementation activities: Implement the decision and monitor its success.


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This four-stage decision-making process includes the ability to cycle back to aprevious stage if the decision maker is dissatisfied with the intelligence gathered,the alternatives developed, or the success of implementation activities. Also notethat each of these stages of decision making has unique information requirements,

which we will now explore.1. Information for the intelligence Stage:

Information systems can help in the intelligence stage by providing informationabout internal and external conditions that might require decision making byappropriate managers. Thus, information systems can be used to scan theoperations of an organization or the activities taking place in the businessenvironment. hiformation systems can also scan the external environment toidentify potential decision situations. Sales analysis reports can be furnished tomanagers periodically, when exceptional sales situations occur, or on demand.These help managers identify the status of sales performance, sales trends andexceptional sales conditions for the firm. Information from market research studiesand external databases could also help managers identify changes in consumerpreferences or competitive products.

An important information system capability is needed in this stage. Managersshould have the-ability to make ad hoc inquiries, that is, unique, unscheduled,situation specific information requests. The prespecified reports typically providedby information reporting systems periodically, on an exception basis, or even ondemand may not besatisfactory. Such information products may not give amanager enough information to recognize whether a problem or opportunity exists.


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A MODEL OF DECISION MAKING PROCESS

2. Information for the Design Stage:

The design stage of decision making involves developing and evaluatingalternative courses of action. A major consideration introduced by Simon for thisstage (as well as for the other stages) is whether the decision situation is

programmable or nonprogrammable, or, more popularly, structured orunstructured.

The amount .of structure in typical decisions faced by each level of management,based on the work of G. Anthony Gorry and Michael Scott Morion [ Their work emphasized that many of the changes in managers information needs can beattributed to the degree of decision structure at each level of management.Decisions at the operational level tend to be more structured, those at the tacticallevel more semistructured, and those at the strategic level more unstructured.

Therefore, information systems must be designed to produce a variety of information products to meet the changing decision needs of managers at differentlevels of an organization.

The inventory reorder decisions faced by most businesses are frequently quantifiedand automated. Inventory control software includes decision algorithms thatoutline the computations to perform and the steps to take when quantities in


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inventory are running low. Computing economic order points and quantities is atypical example. Thus, one way that information systems can support structureddecisions is by quantifying and automating a decision-making process. In othercases, prespecified information products such as periodic reports can provide most

of the information needed by a decision maker faced with a structured decisionsituation.

Decision support systems and expert .systems can give managers such assistance.Models of business operations can be developed with decision support software,including advanced statistical, management science, and modeling packages, orless-complex spreadsheet programs. These packages and models can then be usedto manipulate information collected in the intelligence stage to develop andevaluate a variety of alternatives. A sales analysis display generated by a popular

executive information system with DSS capabilities.

3. Information for the Choice Stage:

Information systems should help managers select a proper course of action fromthe alternatives developed during the design stage. Of course, this assumes thatenough information was gathered during the intelligence phase and that a sufficientnumber of alternatives were developed and evaluated during the design stage. If not, the manager may choose to return to those stages for more data or alternatives.

However given the time and resource constraints of the real world, most decisionmaker; will choose to satisfied rather than optimize when faced with a decisionsituation. That is, they will rarely act as rational economic beings who insist thatall relevant information be gathered, that all rational alternatives be considered,and that only the optimum alternative be chosen. Instead, they will act with whatSimon calls bounded rationality. That is, they will be satisfied to make a decisionbased on incomplete information and a limited number of alternatives if it meetssome of their subjective preferences and produces an acceptable level of results. In

any case, information systems can help managers in the choice stage in severalways. Manager can be provided with summarized and organized informationemphasizing the main points (such as major assumptions resource requirements,and expected results) of each decision alternative. Various financial and marketingratios and other methods can-also be used to prioritize alternatives and thus helpmanagers select the best course of action.


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4. Information for the Implementation Stage:

The implementation stage involves accomplishing activities that implement thedecision alternative selected during the choice stage. It also involves monitoringthe success of the decision after it is implemented. Information systems can helpmanagers monitor the successful implementation of a decision. They can providefeedback about business operations affected by the decision that was made. Thishelps a manager assess a decisions success or faijure and determine whether follow- up decisions are needed.

If a decision to cut promotion costs is made. a sales manager can monitor thedecisions effects on sales activity. If a larger drop in sales occurs than wasexpected, the manager must then decide what actions to take to correct theproblem. The decision making process then begins all over again,

Decision Making in Ones Personal Life:

Some of the decision making techniques that we use in everyday life include:

1. listing the advantages and disadvantages of each option, popularized byBenjamin Franklin.

2. flipping a coin, cutting a deck of playing cards, and other random orcoincidence methods.

3. accepting the first option that seems like it might achieve the desired result.4. prayer, tarot cards, astrology, augurs, revelation, or other forms of divination.

5. acquiesce to a person in authority or an expert.

DECISION MAKING SOFTWARE

Due to the large number of considerations involved in many decisions, computer-based decision support system (DSS) have been developed to assist decisionmakers in considering the implications of various courses of thinking. They can

help reduce the risk of human errors. DSSs which try to realize somehuman/cognitive decision making functions are called Intelligent Decision SupportSystems (IDSS)


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THE ENVIRONMENT OF DECISION MAKING

The environment in which decisions are made and implemented may be of thefollowing types:

1.

Certainty: Under conditions of certainty, full information is available .on all the factorsrelevant to the decision. The decision-maker knows exactly the outcome of eachalternative. The information reliable and is easy to get. The future is highly predictable. It is therefore possible to choose the best alternative. For example, a managerwho decides to invest Rs. one lakh in 10 percent ten year Government bondsknows that the investment will earn exactly 10 percent interest and will mature atthe expiry of ten years. Relatively very few managerial decisions are made in an

environment of certainty. Deterministic decision models are used in such anenvironment.

2. Risk:

In an environment characterized by risk, some information about the decisionsituation is available but it is not fully reliable. The decision-maker may be able todevelop alternative course of action but their outcomes are not certain. Only theprobabilities of various outcomes are known. In the absence of full and reliableinformation future conditions cannot be predict accurately. Probabilities todifferent outcomes can be assigned on the basis of available information andpersonal experience. For instance, a life insurance company can predict thepercentage of people of a certain age dying each year. On the basis of suchprediction. It decides the amount of premium to be collected to pay claims and stillearn a profit.

3. Uncertainty:

Under conditions of uncertainty everything is in a state of flux. Information isneither available nor reliable. Several random forces operate in the environmentmaking it unpredictable. The decision-maker does not know the outcomes of alternative courses of action and he cannot determine the probability of potentialoutcomes. Judgment, past experience and intuition play a vital role in decision-making.


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In the real world, the environment of decision-making may contain all the threeelements. The decision-maker may have full information on certain factors, partialinformation on a few and no information on others. With the availability of additional information, uncertainty may become risk and risk may become

certainty. At the same time new situations may become risk may emerge aboutwhich very little is known. Thus certainty, risk and uncertainly constitute acontinuum.

ROLE OF CREATIVITY IN DECISION MAKING

Creativity is the human faulty of generating new, novel, unique and improved idealinsights or approaches to do things, to solve problems, to make decisions and toresolve crises or conflicts. It is the ability to think originally. It is not a superhumanor supernatural ability but a reflecting process. It is a distinct human attributedthat calls for an open mind, rich imagination and courage to think in anunconventional manner.

Creativity is different from innovation. Creativity is the process of generating newidea while innovation involves the translation of the idea into a new product orservice. Creativity is widespread but innovation is rare. Innovation requires muchmore time and resources than creativity. However, creativity and innovation ansequentially related to each other. An effective organisation requires both creativeand innovative people to achieve its goals Creative ideas are of no use until they anconverted into useful products and services. Similarly, innovations are not possiblewithout creative ideas.

Creative flourishes best in a dynamic and tolerant atmosphere. Individuals differ intheir ability to be creative. Creative people can be bothersome because theygenerate a high degree of conflict and controversy in the organisation. They appearirrational because they do not believe in conventional wisdom. Creativity may becounter productive when decisions must be made quickly to overcome some urgent

crisis. In such situations, experience, commonsense and decisiveness are moreimportant. Creativity has a limited role when the external environment policy,trade union militancy, competitive pressures and so on.

The creative approach to decision-making is characterised by the followingfeatures.


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It does not take things for granted. It challenges the obvious facts of theproblem. The problem is redefined and restructured in new ways.

It looks at problems and alternatives from new perspectives It raises novelquestions and seeks answers to them.

It questions and rejects the conventional and established ways of doing things.It breaks new grounds and seeks novel methods to get results.

It deviates from rational, orderly and step by step procedure of decision-making.

It puts forth wild and reflective ideas which are apparently unrealistic andirresponsible. They question authority and upset routine. They tend to be moreflexible and independent.

Creativity plays a vital role in decision-making and problem-solving. It helpsindividuals and groups to arrive at better decision. Several human andorganizational problems are open ended, complex and unstructured. These are notamenable to stereotyped and scientific approaches, and require a creativetechniques. Creative approaches are more effective in solving problem of risingcosts, declining sales deteriorating quality, low motivation and morale, industrialunrest, poor image and so on. Creativity is especially helpful in perceiving problemand in generating alternative courses of action. Creative people are enterprisingand come out with of beat ideas by deviating from the beaten track. Creativityenables an organisation to find new and better ways of accomplishing its goals. Italso enables the organisation to anticipate change. This has become very importantas new technologies, products and methods of operation make old one obsolete.Thus, creativity is a vital ingredient successful decision-making.

Creativity by itself enough in decision-making unless the creative ideas are capableof being implemented. Creative decisions are good to the extent that they helpimprove the results. Creative decisions should be feasible.

Creativity is not necessarily a divine gift. It can be stimulated through training andexperience. It however requires a proper atmosphere .to flourish. Creative facultygets when unquestioned conformity and obedience are insisted upon. Managersinhibit creativity by imposing rigid procedure and rules, by creating fear of criticism and so on. In order to foster creativity, managers should encourage new


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ideas, permit pen communication tolerate reasonable mistake, recognize andreward creative efforts, and overcome resistance to change.


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CONCLUSION

Decision making is the process of deliberately selecting a course of action fromavailable alternatives for achieving the desired objective. Decision making aubiquitous function because it is inherent in all managerial functions, Programmedand non-programmed, strategic and tactical, individual and group decisions.

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