TOOLS & TECHNIQUES OF DECISION MAKING

A mini project report submitted in partial fulfilment for the award of degree of MASTER OF BUSINESS ADMINISTRATION By

PAVAN KRISHNA G
( Regd No: 13KQ1E0038 , A-SECTION )

Under the esteemed guidance of

N.RAJESH BABU

Asst. Professor

DEPARTMENT OF MANAGEMENT STUDIES PACE INSTITUE OF TECHNOLOGY AND SCIENCES

(AN ISO 9001:2008 CERTIFIED INSTITUTION) (APPROVED BY AICTE,AFFILIATED TO JNTUK,KAKINADA) 2013-2015

CERTIFICATE

This is to certify that the mini project report entitled tools and techniques of decision making is a bonafide work carried out by Pavan Krishna G , Regd No: 13KQ1E0038 , A-Section who carried out the project under my supervision in partial fulfilment for the award of degree of Master Of Business Administration from JNTUK, Kakinada during the academic year 2013-2014.

Signature

Signature

N.RAJESH BABU, ASST. PROFESSOR

of candidate

Management :
Management in all business and organizational activities is the act of coordinating the efforts of people to accomplish desired goals and objectives using available resources efficiently and effectively. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing a goal. Resourcing encompasses the deployment and manipulation of human resources, financial resources, technological resources, andnatural resources. Since organizations can be viewed as systems, management can also be defined as human action, including design, to facilitate the production of useful outcomes from a system. This view opens the opportunity to 'manage' oneself, a prerequisite to attempting to manage others.

Definitions : According to HAROLD KOONTZ, management is the art of getting things done through and with people in formally organised groups. According to HENRI FAYOL, to manage is to forecast and to plan, to organise, to command, to co-ordinate and to control. According to PETER DRUCKER, management is a multi-purpose organ that manages business and manages managers and manages workers and work.

Features of Management

Following image depicts fourteen important features of management.

Steps of Decision Making Process: Following are the important steps of the decision making process. Each step may be supported by different tools and techniques.

Step 1: Identification of the purpose of the decision: In this step, the problem is thoroughly analysed. There are a couple of questions one should ask when it comes to identifying the purpose of the decision.

What exactly is the problem? Why the problem should be solved? Who are the affected parties of the problem? Does the problem have a deadline or a specific time-line?

Step 2: Information gathering: A problem of an organization will have many stakeholders. In addition, there can be dozens of factors involved and affected by the problem. In the process of solving the problem, you will have to gather as much as information related to the factors and stakeholders involved in the problem. For the process of information gathering, tools such as 'Check Sheets' can be effectively used. Step 3: Principles for judging the alternatives: In this step, the baseline criteria for judging the alternatives should be set up. When it comes to defining the criteria, organizational goals as well as the corporate culture should be taken into consideration. As an example, profit is one of the main concerns in every decision making process. Companies usually do not make decisions that reduce profits, unless it is an exceptional case. Likewise, baseline principles should be identified related to the problem in hand. Step 4: Brainstorm and analyse the different choices: For this step, brainstorming to list down all the ideas is the best option. Before the idea generation step, it is vital to understand the causes of the problem and prioritization of causes. For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause-and-Effect diagram helps you to identify all possible causes of the problem and Pareto chart helps you to prioritize and identify the causes with highest effect. Then, you can move on generating all possible solutions (alternatives) for the problem in hand. Step 5: Evaluation of alternatives: Use your judgement principles and decision-making criteria to evaluate each alternative. In this step, experience and effectiveness of the judgement principles come into play. You need to compare each alternative for their positives and negatives.

Step 6: Select the best alternative: Once you go through from Step 1 to Step 5, this step is easy. In addition, the selection of the best alternative is an informed decision since you have already followed a methodology to derive and select the best alternative. Step 7: Execute the decision: Convert your decision into a plan or a sequence of activities. Execute your plan by yourself or with the help of subordinates. Step 8: Evaluate the results: Evaluate the outcome of your decision. See whether there is anything you should learn and then correct in future decision making. This is one of the best practices that will improve your decisionmaking skills.

Eight tools for streamlined decision-making:

Merlin Mann | Effective Decision Making [Mind Tools] Like so many things, smart decision-making can benefit from the addition of structure, focus, and a bit of metaphor. While imperfect in their own ways, the kinds of tools that support this mental corralling can help tremendously in quieting the chaos, surveying the available options, and then collecting and evaluating the information you need to choose the best course of action. The always-informative Mind Tools shares eight of the most popular and reliable tools for decision making. 1. Pareto Analysis - Often better known as The 80/20 Rule, Pareto helps you locate where you can derive the greatest benefit by expending the least relative effort (or cost or resources or what have you). In the go-go dotcom days, the bizdev guys used to call this low-hanging fruit. Ew. (Seriously, though, once you learn about the 80/20 rule, you start seeing instances of it everywhere). 2. Paired Comparison - Compose a table that pits each option directly against each other option, mano a mano, cage-match-style, and weighting each for relative importance. Its a fast and bloodless way to plow through what would otherwise be a huge mess to evaluate. 3. Grid Analysis - Evaluate a larger set of options based on numerous criteria, then weight the importance of each criterion to derive the best choice. Given the complexity and arithmetic required, this one really benefits from using good old Excel. 4. Decision Trees - Ive never personally used this, but it looks kind of promising. Basically you build a set of what-ifs based on a tree of possible options, assigning the estimated value, cost, or savings associated with each choice. 5. PMI - One of my favorites that I actually use quite a lot. List all the pluses, minuses, and implications behind any decision (Ive also seen this I column referred

6. to interesting or intriguing data points). Then assign a + or - numerical value to each based on the positive or negative impact. Tally up the columns, and your better option emerges. Takes the emotion and guesswork out of complex decisions, with the side benefit of forcing a brain dump. By the way, although you can totally do this in Excel (or on paper), I made a template for OmniOutliner that works like a champ for more lengthy or detailed option sets. 7. Force Field - Ive never completely gotten this one, but I know some folks swear by it. You identify all the forces for and against a theoretical change, weighted for amount of force exerted by each side. I suppose I could see this being useful for touchy political decisions or any time a well-established more is going to be challenged. Might help in mitigating risk and knowing where best to allocate your resources and influence. 8. Six Thinking Hats - Recently added de Bonos book on this subject to the left rail (See it? Over there by all my hippie meditation books?). Its a method for seeing an issue from all perspectives by forcing yourself (or more often your team) toone at a timeadopt different thinking hats that reflect opposing and orthogonal points of view (analytical, positive, negative, creative, etc.). Id be curious to hear how this has worked for folks in real-world projects. Seems like it could get tedious in the wrong hands. 9. Cost/Benefit - This is an evergreen youve probably used a dozen or more times; estimate the costs and the benefits and decide if the delta is worth the hassle. As ever, be sure to account for all the costs of a change, including the meta stuff. TECHNIQUES: NOMINAL GROUP TECHNIQUE DELPHI TECHNIQUE BRAINSTORMING NOMINAL GROUP TECHNIQUE:

Problem is identifed Participants privately write about solution Ideas are presented one at a time, written on chart Each idea is Discussed, Clarified and Evaluated
Participants privately rank ideas in order of their preference The highest ranking idea is taken as group decision

DELPHI TECHNIQUE:
Problem is identified Experts are gathered Propose problem to experts Experts record solution/ recemondations Experts responses are compiled& reproduced responses are shared with all others

experts comment on others ideas & propose solution solutions are compiled and presented

BRAINSTORMING:
problem is given to group clearly members are asked to give ideas factors inhibiting the idea generation is pushed back criticism or comment are strictly prohibited

Modern Techniques Used For Decision Making: Risk Analysis Decision Tree Preference Theory

Risk Analysis: 1. An Architecture 2.A Manager Decision Tree: Q) A manager is willing to introduce new product. He has two alternatives to manufacture . 1.Temporary Tooling 2.Permanent Toolin

CONCLUSION:
When it comes to making decisions, one should always weigh the positive and negative business consequences and should favour the positive outcomes. This avoids the possible losses to the organization and keeps the company running with a sustained growth. Sometimes, avoiding decision making seems easier; especially, when you get into a lot of confrontation after making the tough decision. But, making the decisions and accepting its consequences is the only way to stay in control of your corporate life and time.

BIBLOGRAPHY: 1. Data colleted from internet 2. From the management books i.e., A STUDY OF MANAGEMENT 3. From news papers i.e., THE HINDU