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Decision making6

One of the most important tasks a manager performs is decision making. This may be defined as the process of choosing a course of action (when alternatives are available) to solve a particular problem. The steps listed below provide a simplified framework of the ideal decision-making process.

The first step, defining the problem, is perhaps the most difficult step. It involves careful analysis of a situation in order to state the problem and determine its cause. Defining the expectation in Step 2 involves stating the result that is expected once the problem has been solved. Next, data are gathered about the problem. This information can be obtained from a variety of sources: observations, surveys, or published research. Most businesses rely on computers to process, summarize, and report data. Having sufficient data that are valid and reliable is necessary for Step 4.

Here the decision maker develops feasible alternatives, or potential solutions, to the problem.

In the fifth step, the decision maker evaluates these alternatives in terms of the expected result of the solution and limitations, such as time and money. Finally, the decision maker compares the alternatives and chooses the one that has the best potential for providing the desired results.

The decision-making process is followed by:

• implementation of the chosen alternative (putting it into action)

• evaluation of that alternative

If the alternative achieves the desired result, it is then known as the solution.

Decision making is a complex business subject which combines the most complicated elements of the operational and theoretical aspects of management. Decisions are frequently influenced by structure of the organization and environmental factors.

One of these factors—social and cultural background—affects the interaction among people involved in the decision process and provides the cultural framework within which they may comfortably operate. The best alternative for solving a problem, for example, might be to replace an employee who is unsuited for a position. However, if in the society's culture there is a tradition of lifetime employment with one company, that alternative is not really feasible because of social and cultural restrictions. With regard to the structure of an organization, a number of factors may alter the ideal decision-making process. The amount of flexibility within an organization and the available resources (such as facilities, technology, or fiscal reserves) are often controlling factors. The amount of data available may also limit the range of alternatives that can be considered. Another organizational factor is the importance of the decision being made in relation to other problems and responsibilities of management.

Three other factors also influence the following of a model decision process: time, creativity, and risk. The amount of time available to make a decision for a given problem is often determined by the environment, not the management. The time factor may affect the creativity of the solution to a problem. The risk associated with a particular course of action may be lessened by use of a group rather than an individual decision maker. Time, resources, and culture may affect the workability of a group process, although research shows that group: often come up with better solutions than individuals.

Decision theory and the ideal decision-making model tend to picture the process as one in which managers operate by themselves, free of restrictions of time, data, and resources.

Comprehension