Risk & Uncertainty in Managerial Decision Making.

1. Topic:
Risk & Uncertainty in Managerial Decision Making.
Presented to: Mr. Waqas Raza
Presented by: Mateen Altaf
Class: MBA (B&F) 4th semester
Subject: Managerial Economics (8522)
mataltaf@hotmail.com
Allama Iqbal Open
University, Islamabad

2. Acknowledgment
First of all thanks to ALLAH, Who is most beneficent & the
most merciful, Whose blessings are abundant & favors are
unlimited.
It’s my pleasure to acknowledge the guidance and support of
my subject teacher Mr. “Waqas Raza” for his endless
guidance.

3. Introduction
Nature of Decision Making:
 Making effective decisions, as well as recognizing when
a bad decision has been made and quickly responding
to mistakes, is a key ingredient in organizational
effectiveness.
 Some experts believe that decision making is the most
basic and fundamental of all managerial activities.
 Decision making is most closely linked with the
Planning function.

4. What is Decision Making?
Decision making is the act of choosing one
alternative from among a set of
alternatives.
We have to first decide that a decision has to be made and
then secondly identify a set of feasible alternatives before
we select one.
(SOURCE: Ricky Griffin, 6th Edition, Fundamentals of Management.)

5. Decision Making Process:
 Recognizing and defining the nature of a decision
situation.
 Identifying alternatives.
 Choosing the best (Most Effective) alternative, and
 Put into practice.

6. Decision Making Conditions
 A state of risk exists when a decision maker makes
decisions under a condition in which the availability of
each alternative and its potential payoffs and costs
are all associated with probability estimate.
 Decisions such as these are based on past
experiences, relevant information, the advice
of others and one’s own judgment.
 Decision is ‘calculated’ on the basis of which
alternative has the highest probability of working
effectively.
Under Risk:

7. Under Uncertainty:
 A state of uncertainty exists when a decision maker does
not know all of the alternatives, the risks associated with
each, or the consequences each alternative is likely to have.
 Most of the major decision making in today’s organizations
is done under these conditions.
 To make effective decisions under these conditions,
managers must secure as much relevant information as
possible and approach the situation from a logical and
rational view.
 Intuition, judgment and experience always play major roles
in the decision-making process under these conditions.

8. Case Study
Nirala Sweets was originally founded
by Taj Din in 1948 after he migrated to
Lahore from Amritsar, India and
started a small breakfast shop in the
inner city of Lahore. Apart from
producing and selling traditional
sweets (Mithai) Nirala also has their own branded snacks, dairy
products and beverages. They also serve traditional breakfast: Puris,
Suji Halva. Chaney, Lassi or Tea

9. SWOT Analysis
Strength:
 Widely acceptable as a symbol of quality.
 Enjoys approximately 30% of the market share.
Weakness:
 Employee rewards/promotion process is inadequate.
 Price is out of reach from consumers of low income.

10. Threats:
 Competitors are threats to Nirala.

11. Conclusion
Decisions are very important factors that determine the
growth of organizations and help achieve the goals. Nirala
is a distinguished brand in Pakistan. NIRALA claims that
“we don’t compromise on quality”, and it is proved to
be right, that is why it is growing day by day.