Decision Making Essay

finish qualification disregard be define as the cognitive passage resulting in the leaseion of a belief or a course of a action among several choice possibillities. Every Decision fashioning outgrowth produces a final choice James Reason (1990) that may or may non promp action. Effective Decision Making is the study of identifying and choosing alternating(a)s ground on the values and preferences of the ratiocination driver. Decision qualification, is oneness and only(a) of the central activities of perplexity and is a huge part of any implemantation. For strong determination fashioning, a person must be adequate to forecast the outcome of each option as well, and found on all these items, determine which option is the best for that particular situation.Human performance in finality reservation terms has been the subject of active reserach from several perspectives. Form a psychological perspective, it is necessary to come across individual finis in the con text of a set of needs, preferences an individual has and values they seek.Form cognitive perspective, the finality reservation exercise must be regarded as a continous process integrated in the interaction with the surroundings. From a normative perspective, the analysis of individual finales is concerned with logic of determination fashioning and rationalness and the invariant chioce it leads to.Daniel Kahneman, Amos Tversky 2000 The ability to puddle wise, educated endings is essential to living a succesful and fulfilled life. Individuals, roots or teams train finales every day. Some terminations be very essential and affect lot of spate whereas other s runping points ar small and affect only one or two people. A decision-making process based on data leads to considerably decisions. A major concern in guidance has been to understand and improve decision making. Isabel Briggs MyersMyers, I.1962. There lead been two approaches to focus decision making Huber, 1980. The stolon is concerned with bring onment and operation of normative decision rules based on formal logic derived from stintings or ststistics.The second involves descriptive accounts of how people actually go closely making judgements, decisions and choices. Isable B. MyersMyers,I. (1962).Decision making can usually be improved by breaking a conundrum into parts, working on the parts separately, and then faction themm to make final decision. It has been shown in a variety of works that business decision making environment is a unity of decision shapers experience, belief and perceptions on one side, and decision support tools and techniques on the other side.In making significant decisions, any info rmation sources that contain relevant important atomic number 18 deprivation to be accessed and substance abused. In this presentation we argon going to show decision making process, theoretical accounts, and types. And explain how we can make strategic decisions in different situations. In fact in making decision in management has a significant role as Peter Drucker says 90 percent of activities in management is decision making, so we atomic number 18 going to discuss this important subject to show different survey of it and sire new ideas in this argona re await.2.0 Decision Making Process and StepsDecision making can be categorised as a process evaluating a conundrum to find stem. It is everlastingly best to strive for the best decisions? There may non be the Probably not injure for perfect solutions cann freeze decision overlords into inaction. They to a fault superpower be fear of making wrong decision.When forum data and study becomes more important than making decisions and taking action sometimes, its better to make decisions, risk mistakes and then learn from the mikstakes when you make them. After all, then saying isnt decision make perfect, its practice makes perfect. S. Herper (2000) As said coca cola decision which has resluted to tommyrot suggests the grand need for decision making in business. A management decision typically typically affects a great number of people-customer, stockh matureers, employers and the general worldly concern.Coca cola is accountable to more than century000 officeholders and of extensive number of employee. Professional undertake to see the managers decision which reflected its positive returns in their revenue identify.It has emphasise on the welf ar of the employees and the economis health of the community in large and take into affection the effect to the country as whole. To strive and prosper, proffessional managers should be able to withstand the pressure and make sound decision. Companies do not necessitate dynamics failures they require individuals wha be properly equipped to make decisions. It doesnt mean that the decision noblemans (managers) is 100 percent is accurate intimately of the time.They also tends to make wrong decisions most of the time a t the outgo of the shareholders.It does suggest that succesful managers have a higher batting average than les succesful managers. R. Wayne Mondy (1993) The process of decision making does not occur in tandem. The brass external environment influence the decision making process and the inner(a) environment assist what and how the decision making should take place. For causa the success of Pepsi-Cola in gaining market share while Coca Cola lost it and help to convince Goizueta that was needed. Whether a decision is programmed or no(prenominal) programmed and regardless of managers choice of the classical, administrative, or political sit around of decision making, a decision making process typically hasfive steps1) Idenitify the problem or prospect2) Develop alternative3) Evaluate alternative4) require and implement the best alternative5) Evaluate the decision2.1. Identify the problem or prospect check to Harold Leavitt, a business leader must have thre major talents proble m solving and subsequent decision making, implementing and visionary and entreprenuel talents. Some people view decisions making only as problem solving, however problems are best treated as opportunities. The offset printing in the decision making process should be to scenting for alternatives in the first place a decision is made. As known in that location is no one best decision method is live on. All problem should be treated as opportunities. Eventually, problems bequeath make themselvesevident. All problem can be converted to opportunity. All existing problem can be corrected if managers establishment the problem as opportunity to progress. Managers confront a decision requirement in the form of every a problem or an opportunity.A problem occurs when organisational achievement notaccomplishment is less than establishment destinations. An opportunity exists when m met as ecpectaion of an organization and exceed specified targets of an organizations. Identifying of a p roblem or opportunity is the first step in the decision sequence and requires survillance of the internal and external environment for issues that merit executive director attention. Richard L. chapped (2005) Managers often search and evaluate the world around them to determine the progres of the organization .Some information comes from periodic monetary reports, performance reports, and other sources that designed to discover problems before they become too serious. Managers also take expediency of informal sources. They talk to other managers, gather opinions on how things are going, and seek advice which problems should be talked.2.2 Develop alternatives A typical problem can be solved in various ways and method. Several alternatives is getable before a decison is made. The choices that the decision maker has to decide are alternatives. A decision making process is utmost important and a executable way to solve the a probleeThe only alternatives that really counts is the one judged best among those considered. At this point in the decision making process, however, it is important to consider all feasible ways by which the problem can be solved. Once the problem or opportunity has been recognized and analyzed, decision makers begin to consider m (opportunity).The next stage is to generate come-at-able alternative solutions that result respond to the need of the situation and correct the underlying causes. One study found that limiting the search for alternatives is a primary csuse of decision failure in organizations. Paul C. Nutt (1999). Decision alternatives can be though of as the tools for reducing the difference between the organizations current anddesired performance. Once a problem or opportunity has come to managers attention, the understanding of the situation should be refined. Diagnoses is the step in the decision making process in which managers analyzes underlying casual factors associated with the decision situation. Managers make a mistake here if they jump right into generating alternatives without first exploring the causes of the problem more deeply. C. Kepner and B. Tregoe (1965).2.3 Evaluate Alternatives Almost all possible solutions there are advantages and disadvantages. But there maybe be only one solution for any existings problem (opportunity). It may also faculty not be the only best solutions for the problem (opportumity). Coca cola alienate to replace the old coke is part of an alternative decision. It is essential that managers realistically appraise arguments for or against a particular alternative. sometimes an idea might sounds good initially, but taking time to weigh the pros and cons of alternatives usually pays off. There are number of ways evaluating alternatives. One way is to list yhe strength and weakness of the problem (opportunity). Total esteem should be attached and to forfend on the strength and weakness and overall importance should be assumption to conclude the alternative. 2.4 Choose and implement the best alternative an alternatives implentation is chosen once the decision of choice is established. The decision of choice is the selection of the most promising of several alternative course of action. In order to cull best alternative one has to achive the desired results using the resources.In order to make choices on managers personality factors and go forthlingness to stimulate risk and un deduction. At this stage the use of managerial, administrative, and persuasive abilities to ensure that the chosen alternative is carried out. It also has a similirarity to the idea of strategic implementation. The ultimate success of the chosen alternative depends on the whether it can be translated into action. In the evaluation stage of the decisionprocess, decision makers gather information that tells them how well the decision was implemented and whether it was effective in achieving its tendencys.Feed buns pertinent because decision making is a continou s, never ending process. When an executive or board of directors votes yes or no then the decision making is not arrestd.The feed back provides decision makers with information that can assist to new decision cycle. What separate the succesful managers and less succesful ones is the ability to select the best course of action from several possible alternatives. The alternative offering the highest promise of attaining the objective, taking into consideration the ovearall situation, should be selected. It is an easy t demand but fear to make a wrong decision result make the managers to avoid making decision at all. In most organization the onus is on the managers to make decision as they are high salaried and they carry the task to make a sound decision.2.5 Evaluate the decision For completing a decision-making process one have to first menace to the realities of the business environment. An objective assessment required to turn the problem into opportunity and this implementation does not complete the decision making process. R.Wayne et al (2005)3. Ethical Decision Making Half of all decisions taken be managers not necessarily solev the problem after all. Most of the time they ignore honourable questions. High ethical and guideline standards needs to put into consideration before performing the management functions. When making un pop decision such as layoffs, one has to be ethical by giving advance notice and assisting them to find a new job elsewhere or within the organization. Couple of study need to be taken to evaluate oneself, are we making the right decision or not. Firstly ask yourself, ar there any legal restrictions or violations that will result from this action? If so, try other alternative course of action. Secondly does it ciolate the union code of ehics? If yes find a different pathto follow. Thirdly ask does this mmet the guideline of my own ethical philosophy? and if the answer is yes, then your decision must still passing two importan t test. Gitman et al (2008)The feeling test now you must ask, How does it make me feel? this will enable yourself to evaluate your comfort level in producing a particular decision. A sense of provocation will seep in if youve make a wrong decision where one will release of sleep or appetite and my go into depression. Front page of the newspaper test the final test is the front page of the newspaper the question to be asked is how a critical and objective reporter would report your decision in a front page story. Gitman et al (2008) Decision relos According to Mitzberg the time managers put down obtaining and sharing information is not an end in itself. The time spent taking to and obtaining and sharing information with people inside and outside the company is useful to managers because it helps them make good decisions. According to Mitzberg, managers engange in quadruple decisional sub roles entreprenuer, disturbance handler, resource allocator and negotiator. Chuck Milliams (2 005)4. Decision Making ModelsDecision making pretences primary decisions making models the rational model and the leap intellect model. The rational (also called the classical model), the decisio maker attempts to use optimizing, selecting and best possible alternative. In bounded rationality model (also called the administrative that meet the minimal criteria. Robert N. Lusssier (2006). Making better decisions upstart research shows that managers, who make the best decisions, dont overanalyze by relying on rational decision making model, nor do they oversimplify by relying solely on their intuition. Instead, many managers utilize a concept refered to as recognitional decision making. Recognition decision making leads to quicker decisions than rational decision making because it integrates the use of memory in the context of a situation in order to develop an immediate feel for the current situation. Chuck Williams (2005)4.1 Classical Model the classical model of decision model of decision making is based on economic assumptions. This model has arisen within the management literature because managers are expected to make decsisions that are economically sensible and fit the organizations best economic interests. The four assumptions underlying this model are as follows 1. The decision maker operates to accomplish goals that are known and sgreed on. Problems are precisely formulated and defined. 2. The decision maker strives for conditions of certainty, gathering complete information. All alternatives and the potential results of each are calculated.Assign 3. Criteris for evaluating alternatives are known. The decision maker selects the alternative that will maximize the economic return to the organization. 4. The decision maker is rational and uses logic to claim values, order preferences, evaluate alternatives, and make the decision that will maximize the attainment of organizational goals. The classical model of decision making is considered to be norm ative, which means it defines how a decision maker shouls make decisions. It does not force how managers actually make decisions so much as it provides guidelines on how to fulfil an ideal outcome for the organization.4.2 understanding It is frequently said that efective decision making must be rational. People acting and deciding rationality are attempting to reach some goals that can not be attain without action. They must have a clear understanding of alternatives coerces by which a goal can be reached under existing fortune and limitations. They also must have information and the ability to analyze and evaluate in light of the goal sought. In many respects, the classical model represents an ideal model of decision making that is often un attainable by real people in real organizations. It is most valuable when applied to programmed decisions and to decisions characterized by certainty or risk, because relevant information is available and probabilities can becalculated. Rich ard L. Daft (2005).Programmed decisions are design based on the historical data to enable all levael of managers are able to make a decision base on the same situation problems all the time. As such it can be reason as a set of policy serve as a guideline and also act as a SOP. A non programme are made to situations that are unique, are poorly defined and largely unstructured, and ahev impportant consequences for the organizations. The decision regarding a recall at Toyota is an example of a a non programmed decision. Another good example comes from the financial services industry. Decision to to acquire a company, build a new factory, develop a new product or service, enter a new geographical market, or relocate head quarters to some other city are all non programmed decisions.4.3 Bounded rationality The administrative model is base on the work of Herbert A. Simon. Simon proposed two concepts that were slavish in shaping the administrator model bounded rationality and satisficing . There are limitations to the bounded rationality or boundaries. Organizations are incredibly interwoven and managers have the time and ability to process only a limitated amount of information with which to make decisions. Because managers do not have the time or cognitive ability to process complete information about complex decisions. Satisficing is a decision made at the first encounter of any situation.Minimal consideration disposed to consider any alternative. There is no time frame on how long this process will take place. It merely rely on assumptions. 1. Organization decision goals are often not clear, exist dispute and always have dis system among the managers. 2. Rational method are not often popular amongst managers alike and only confirned to simplistic point of view and does not get the attention of of real organization events. 3. Managers searches for alternative sre kimited because of human, information, and resources constraints. 4. All the decision makers (manag ers), often prefer the satisficing rather than maximizing solution, partly because they have especial(a) information and partly because they have only unclear for whatconstitute a maximizing solution. 4.4 Administrative model This model is description are charecterized by uncertainty and ambiguity.Most of the management decisions are normally programmeable to tot up themselves to any degree of qualification. The decision maker (manager) are unable to decide and economical rational decision. no(prenominal) programmed decisions are used for unstructured, novel, and ill-defined situations of a nonrecuring nature. Example is the developing of the four wheel drive rider car by Audi. In fact strategic decision, in general, are none programmed decisions. Most decisions are neither completely programmed decisions. Most decisions are neither completely programmed nor programmed none programmed they are a combination of both. Heinz Weihrich et al (2005).The administration model of decision making is based on the work of Herbert Simon. Simon proposed two concepts that were instrumental in shaping the administrative model bounded rationally and satisfying. According to the administrative model Decision goals are often unclear and disputing in nature and lack of consensus among managers. Managers are often not able to see the problems (opportunity) that exists in the organization. Rational procedure are not often and when they are they are trammel to a simplistic view of the problem that does not captiure the complexity of real organization view.4.4.1. Intuition another aspect of administrative decision making is intuition. Intuition represents a quick apprehension of a decision situation based on past experience but without conscious thought. Weston. H, Agor (1986). Intuitive decision making is not arbitrary or irrational, because it is based on years of practice and hand-on experience that enable managers (decision makers) to promptly identify solutions without goin g through pain staking computations.4.5 Political model is the model of decision making is often used for making none programmed decisions when conditions are uncertain, information is limited and there is often disagreement amongmanagers about what goals to pursue or what course of sction to take. The political model closely resembles the real environment in which most managers and decision makers operate. Decisions are complex and invlolve many people, information is often ambigous, and disagreement and conflict over problems and solutions are normal. There are four basic assumptions of the political model. Organizations are made of groups with diverse interests, goals, and values. Information is ambigous and incomplete. Managers do not have the time, resources, or mental capacity to identify al dimension of the problem and process all relevant information. Managers engange in the push and pull of debate t decide goals and discuss alternatives. Decisions are the result of bargain ing and discussion among coalition members. Richard L. Daft (2005)4.6 The Kepner-Tregoe method this model combines the oblective approach with some subjectivity. The subjectivity comes from determining must and want criteria and assigning weighted values to them. Robert N. Lussier (2006). The Kepner-Tregoe method is a technique for comparing alternative using the criteria selected in steps 2 of the decision making model.Robert N. Lussier (2006).5. Individual Decision Making and Group Decision Making Problems in any organization occurs when they were conflict of agreement of certain issues, as such one must decide who should participate to find the solution. As refering to the current trend the management favors increased employe participation. Using to group to improve decision making according to study reported in fortune magszine. 1 percent of U.S. companies use teams and group to solve specific problem. Individuals who are highly defensive attitude in this manner show significa ntly greater left prefrontal cortex activiry as calculated by EEG than do less defensive individuals. Blackhart, G. C., & j. P. (2995) Group decision making is critically important to meet the current fast moving organozations trends.The informal or formal group exist to reach a consensus and todiscuss a particular problem by creating a short list of pleasant alternatives or deciding on criteria for accepting an alternative. They are known as a support remains and supported by electronically to support this system. Turban, et al (2008). Group method invlove in decision making It always discussed that it only involve a single manager to make a certain organization decision. This individual is liable for the outcome of decisions under their control. Effective decisions generally combine high quality with bridal by those affected by the decision. Group bring different resources to the decision making task. R. Wayne et al (1993) 5.1 authority advantages of group decision making Th e group has an advantage to make a sound decision on complex issues in comparison the individuals in a organization.Special in case of significant none programmed decision and conditions of risk or uncertainty. More information, alternatives, creativity and innovation Generally a group of people contains more information than an individual. Than they can more creatine and innovative. They usually have options and alternative to apply before an effective decision is agreed upon. Greater communication to the decision The people engange in the decision making process have greater options in increased communication to implementing the decision. And improved participation in problem solving and decision making is rewarding and personally satisfying to the people and will improve team spirit and motivitation. Training.Allowing participation in decision making trains people to work in groups by developing group process clevernesss. 5.2 Potential disadvantages of group decision making Wasted time Satisficing Domination and goal interlingual rendition A certain sub group may dominate the group decision. Disagreement occurs when there were no 100 percent agreement from overall decision making process rather than pursuing goal of finding the best solution. Conformityand group thinking Inferior feeling and disagreement might crept in before a certain agreement takes precident and the end result will be a conflict. Robert N. Lussier (2006). For creating, yeasty alternative solutions in groups decision making there are five popular techniques BrainstormingSynectics tokenish groupingConsensus mappingDelphi techniqueBrainstoming is the process of suggesting many possible alternatives without alternatives. Synectics is the process of generating novel alternative through role playing and fantasizing. Nominal grouping is the proces of generating of generating and evaluating alternatives using a structured voting method. This proces usually invloves sise steps listing , recording, clarification, ranking, discussion and voting. Consensus mapping is the process of developing group agreement on a solution to a prblem. The Delphi technique involves using a series of confidential questionnaires to refine a solution. Robert N. Lussier (2006) 5.3 Personal decision making Imagine you were a manager at, GM, a local movie theater or the public library.How would you go about making important decisions that might shape the future of your department or company? As we are aware that there is number of factors may effect how a managers make efevtive decisions. For example the decisions may be programmed or non programmed, situations are charactirized by various level of uncertainty, and managers may use the classical, administrative, or political model of decision making. Richard L. Daft (2005) 6.0 Innovative Group Decision MakingThe critical skill the managers possess to make a high quality decisions is an essential as they have to make legal age of decision on their own. Is it practical for the managers make thisdecision?No. The rapid face of the business enviromnment calls for estimable the opposite i.e, for people throughout the organization to be invloved in decision making and have the information, skills, and immunity they need to respond immediately to prblems and questions. Managers bdo make some decisions as individuals, but decisions makers more often are part of a group.Indeed majoir decisions in the byusiness world rarely are made entorely by a single manager. 6.1 Brainstorming is a method a group of people and discuss spontaneously gigantic range of ideas and policies before decision making. The efective brainstorming are people can be bulid on one anothers idea number of ideas will be fielded and they will come to an consensus after wide range of ideas is discussed. It also have some drawbacks as there maybe making decision to please the superior or to impress colleagues. Studies found that when four people are asked to brainstorm individually. They typically come up with double as many ideas as a group of four brainstoming.6.2 Rigorous debate an efective decision maker (manager) always encourage a rigorous debate of a certain issues. It also recognize that formative conflict based on divergenr points of view bring a problem into focus, clarify peoples ideas, stimulate creative thinking. Chuck buck, the former CEO of Emerson Electric, always sparked debate during strategic planning meetings. Knight believed rigorous debate gave people a clearer picture of the competitive landscape and forced managers to look at all sides of an issue, helping them reach better decisions. 6.3 Groupthink pressures for conformity exist in almost any group, and in particular when people in a group like one another they tend to avoid anything that might create disharmony. It has tendency to surpress contrary opinions.When the group thinking mode is activated, maintaining unity will be given priority ather than realis tically challenging problems and alternatives. People censur their personal opinion and reluctant to criticize the opinion of others. 6.4 Bailout in the fast paced environment managers are risk takers and learniong frommistakes. Theyy also not hesitant to pull the plug when something not working. According to researches managers and organizations often continue to invest time and money in a solution notwithstanding strong evidence that is not appropriate. This move is knwons as escalating commitment. Managers might take initiative m to precisely block or distort negative information because they do not want to be responsible to make a wrong decision.ConclusionThe decision making in organizations invloves number of thories and easy to understand. The economic academician has derived methods to assist the decision makers (managers) to derive a good decision in order to avoid making bad decisions. It is very difficult to make good decisions without valid relevant information. It invo lves choosing between a wider process in problem solving. It can be through either an intuitive or season process, or a combination of the two. There are number of stages to any structured decision making. For important decisions it is woryth always keeping a record of the steps you followed to make the decision. That way, if you n are ever critisized for making a bad decision, you can justify your thoughts based on the information and process you used at the time. Furthermore by keeping a record and enganging with the decision making process, you will be strengthen your under standing of how it works. This can make future decisions more easier for managers.References.1. James Reason (1990). Human Error.Ashgate. ISBN 1840141042. 2. Daniel Kahneman, Amos Trversky (20000. Choice, Values, Frames. The Cambridge University Press. ISBN 0521621720 3. Isabel Briggs MyersMyers, l (1962) Introduction to type A description of thetheory and applications of the Myers-Briggs type indicator, Cons ulting Psychologist Press, Palo Alto Ca., (1962) 4. Martinsons, Maris G., Comparing the Decision Styles of American, Chinese and Japanese Business Leaders. Best Paper Proceedings of Academy of Management Meetings, Washington, DC, August (2001) 1 5. Blackhart, G. C.., & Kline, J.P. (2005). Individual differences in anterior EEG asymmetry between high and low defensive individuals during a rumination/ mismanagement task. Personality and Individual Differences, 39, 427-437. 6. Drake, R.A. (1993). Processing persuasive arguments 2. Discounting of truth and relevance as a function of agreement and manipulated activation asymmetry. Journal of Research in Personality, 27, 184-196. 7. Chua, E. F., Rand-Givanetti, E., Schcter, D. L., Albert, M., & Sperling, R.A. (2004). Dissociating confidence and accuracy Functional magnetic resonance imagery shows origins of the subjective memory experience. Journal of Cognetive Neuriscince, 16, 1131-1142. 8. Selected Topics in Indeteministic System Inter systems Publications California, (1989), p. 21 9. Richard L. Daft. New Era Of Management tenth edition, Thomson, (2005), pp 237-258. 10. Heinz Weirich and Harold Koontz. Management A Global Perpective. 11th edition. McGrow Hill, (2005) pp144 11. R. Wayne Mondy and Shane R. Premenua. Management, Concepts, Practices, and Skills. 6th edition, Allyn and Bacon. (1993)pp116,123,128 12. Robert N. Lussier, Management Fundamentals Concepts, Applications, Skills development, Thomson, (2005) pp 115-118,123-126,134,168.1213. S. Harper, Timing the basic principle of anticipatory management, business horizons, (2000)p75 14. Herbert. A Simon, The new science of management decision, harper and bow, (1960)pp5-6 15. Weston. H, Agor, the logistic of intuition how top executives make important decisions, organizational dynamics, 14, (1986), pp5-18 16. Herbert A. Simon, Making management decisions the role of intuition andemotion academy of management executive, (1987)pp57-64 17. James. G. March and He rbert A. Simon, Organization, wiley (1958)pp22 18. http//www.businessdictionary.com/definition/decision-making.htmldecisionmaking 19. http//www.mftrou.com/decision-making-tool.htm.