Decision Making Process

The steps involved in the process of decision making are discussed below:


1) Identification of problem or opportunity: As you set up the goal for your career and strive for the achievement of the goal. Similarly, the manager establishes the goal for the organisation. S/he makes the effort to realise the goal. There may be number of internal and external factors influencing the achievement of the goal. The manager has to identify the exact problem or opportunity related to the organisation.

David B. Gleicher, a management consultant in Stoner, Freeman and Gilbert, (2000), stated that “problem as something that endangers the organisations, ability to reach its objectives, and an opportunity as something that offers the chance to exceed objectives”. It is clear from this definition that the problem creates obstacle whereas the opportunity provides scope for the progress of the organisation. For example ‘how to produce environmental friendly product’ may be a problem for a manager. The redesigning of manufacturing unit for the production of environmental friendly products may provide opportunity to capture growing market of environmental friendly products. Therefore, the problem and opportunity have to be defined clearly.


2) Exploration of possible alternatives: In this stage, the manager explores various available possible alternatives for the solution of the problem. For example, if the sale of a company has been decreasing, S/he has to diagnose the causes of decreasing sale. Is it due to internal factors of the organisation or the external factors? Similarly, if the manager want to capture the new market, how will he manage the factors of production to enter into the new market. He has to explore all the internal and external factors for this purpose.


3) Evaluation of alternatives: In this stage, the manager has to evaluate all the alternatives. S/he examines the positive and negative aspects of each alternatives. If he finds more positive points in a particular alternative, he may think that this alternative may be suitable for his organisation. Based on the available resources, he examines how best the scarce resources may be used for the achievement of the objective of the firm.


4) Selection of the best alternative: After evaluating the positive and negative aspects of all the alternatives, S/he tries to select the best possible alternative for her/his organisation. Peter Drucker has suggested following four criteria for selection of the best way of performing the task.


i) Risk: The meaning of risk has been danger, threat, harm, etc. The manager has to assess the situation considering the risk involved in the activity. He has to think about the minimisation of the risk. This may facilitate the probability of success.


ii) Economy of effort: As you must be aware that the recourses are limited. Therefore, the factors of production should be used in such a manner that they provide the best result. All activities should be managed in such a way that with the application of less effort, you should get better result. There should be economy in terms of utilisation of resources, processing, timing, etc. The management of economy may lead to success to the ventures.


iii) Situation or Timing: You must have heard that the right decision should be taken at the right time. For example, woollen clothes are demanded during the winter. Therefore, the decision related to manufacture and distribution of woollen clothes has to be taken in such a way that these clothes are made available in the market during the winter.


iv) Limitation of resources: As you know that the resources are limited. Therefore, you have to use these resources in such a manner that you get the best result. The manager should reduce the wastages and enhance the productivity at each level to achieve the better result. If the manager examines the above criteria minutely, he may be able to select the best possible alternative action for his organisation.


5) Implementation of decision: After selecting the best course of action, the manager has to implement the decision in his organisation. Sometimes, there may be resistance during the implementation of the decision. In order to facilitate implementation and minimise resistance, the manager may be required to convince the concerned stake holders about the positive consequences of the decision. If all parties related to the decision are convinced, the implementation of the decision may be facilitated. The manager has to put his best effort for the smooth implementation of the selected decision.


6) Follow up: The consequences of the implementation of the decision are examined and analysed frequently. The good result may be considered as an example for solving other related problems. The negative result may be considered for corrective action. Thus, the manager has to take feedback regularly for further improvement as well as correction.

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