Learning Objectives

After completing this chapter, students should

be able to:
Discuss the nature of the decision-making
process
Describe the rational of decision-making
Describe the participative approach to
decision-making

Definition of Decision
Making
The process through which managers identify

and resolve problems and capitalize on

opportunities
The process by which a course of action is

selected as the way to deal with a specific

problem

Types Of Decision
Making
Programmed Decisions
It is structured. A repetitive decision that can be

handled by a routine approach.

Example: Rules & regulations

Non-Programmed Decisions
Deals with unique, unusual or exceptional

problem. It is unstructured and requires higher

level management
E.g.: Governments decision to prevent H1N1 by
stopped all the travelling outside country.

Types of Conditions Under

Decision Making
Condition Under Certainty

Decision maker know exactly what will happen and able to

predict the outcome precisely

E.g.: If you put RM1000 in bank under fixed deposit or a year at
5% interest, then interest earned will be RM50 after 1 year

Condition Under Risk

Refer to future conditions that are not always known in advance
Some information is available, but it is not enough to answer all

questions about the outcomes

Condition Under Uncertainty

Situation in which the individual cannot even assign probabilities

to each of the possible states of nature and assumption is made

that the individual has no information or intuitive judgment.

Definition of Rational
Decision Making

A systematic process of defining problems,

evaluating alternatives, and choosing optimal

solutions

The Rational Model of

Decision Making

The Rational Model of Decision Making has 4

steps:
Investigate the situation

Define problem
Diagnose causes
Identify decision objectives

Develop alternatives

Seek creative alternatives

Do not evaluate yet

Contd
Evaluate alternative & select the best one

Evaluate alternative: Time required, costs

involved, risk involved, benefits or advantages &
limitation
Select the best alternative

Implement & monitor

Plan implementation- review the plan periodically

Monitor implementation & make necessary
adjustment

7 Steps in the Decision-Making

Process
Identifying opportunities and
diagnosing problems
Identifying objectives

Generating alternatives

Evaluating alternatives

Reaching decisions
Choosing implementation
strategies
Monitoring and evaluating

7 Steps in the DecisionMaking Process

1) Identifying opportunities and diagnosing

problems
Managers regularly review data related to their areas of
responsibility, including both outside information and
reports and information from within the organization
2) Identifying objectives
Reflect the results the organization wants to attain.
Both the quantity and quality of the desired results
should be specified because these aspects of the
objectives will ultimately guide the decision maker in
selecting the appropriate course of action
Objectives can be short range or long range

Contd
3) Generating alternatives
Alternatives Strategies that might be implemented
in the decision-making situation
Creativity and imagination are often required in this
step
4) Evaluating alternatives
Assess the value or relative advantages or
disadvantages of each alternative under consideration
5) Reaching decisions
Making a final choice

Contd
The best decisions are often based on careful judgments,

making a good decision involves carefully examining all

the facts, determining whether sufficient information is
available, and finally selecting the best alternatives
6) Choosing implementation strategies
When decisions involve taking action or making changes,
choosing ways to put these actions or changes into effect
become an essential managerial task
The key to effective implementation are:
a) Sensitivity to those who will be affected by the decision
b) Proper planning and considerating of the resources
necessary to carry out the decision

Contd
7) Monitoring and evaluating feedback
No decision-making process is complete until the
impact of the decision has been evaluated
Managers must observe the impact of the
decision and take further action if it becomes
necessary

Group Decision Making

Group decision making is becoming

more common as organizations focus on

improving customer service and push
decision making to lower levels

Techniques for Enhancing the

Quality of Participative
Decision-Making
1) Brainstorming A technique used to enhance
creativity that encourages group members to
generate as many novel ideas as possible on a
given topic without evaluating them
Can enhance creativity by overcoming pressures
for conformity that can retard the development
of creative decision-making
Focuses on generating ideas rather than on
choosing an alternative

Contd
2) Nominal group technique (NGT) A
structured process designed to stimulate creative
group decision-making in which agreement is
lacking or the members have incomplete
knowledge concerning the nature of the problem
Individual members list their ideas on the specific
problem and present the ideas at one time,
without discussion
Members ideas are recorded so that everyone
can see them
After all members ideas are presented, the group
discusses the ideas to clarify and evaluate them

Contd
2) Delphi technique An approach that uses
the experts to make predictions and forecasts
about future events without meeting face-toface
Using survey instruments or questionnaires, a
group leader collects written expert opinions
on a topic

Advantages of Group
Decision Making
Experience and expertise of several

individuals available
More information, data, and facts

accumulated
Problems viewed from several perspectives
Higher member satisfaction
Greater acceptance and commitment to

decisions

Disadvantages of Group
Decision Making
Greater time requirement
Minority domination
Compromise
Concern for individual rather than group goals
Social pressure to conform
Groupthink