Management Subject, it helps BBA/MBA students

1. Module 4:Decision Making
Submitted By:
“Team Priceless Brains”
SUBMITTED TO :
Mr. Dawn Prakash
Assistant Professor,
SDM College of Business
Management Post Graduate Centre For
Management Studies & Research, Mangalore

2. Contents:
TOPIC PRESENTERS
DECISION MAKING PROCESS ABHIJITH R SHANBHAG
MAKING DECISION DEEKSHITHA
ROLE OF EVIDENCE BASED MANAGEMENT MANVITH
TYPES OF DECISION AND DECISION MAKING
CONDITIONS
DHANYASHREE ANGRAJE
DECISION MAKING APPROACHES SUCHARITA AND MYTHRI BHAT
DECISION MAKING STYLES DIKSHA DEVI K
DECISION MAKING BIASES AND ERRORS CHETHAN NAYAK
EFFECTIVE DECISION MAKING JAVERIA MUSKAN AND JABIN TAJ

3. DECISION MAKING
Koontz and o’donnell “ decision making is the actual
selection from among alternatives of a Course of action. It
is at the core of planning.”
Decision making process:
It is the process of making choices by identifying a
decision , gathering information and assessing alternative.
-abhijith r shanbhag

4. 1)Identification of a problem: manager has to identify the
problem. What the problem is. a well defined problem is
half solved.
2)Identifying decision criteria: it is to support a structured
decision. Making process and ensure that decision made
and alternatives selected should support the desired
outcomes.
3)Allocating weights to the criteria: it means ranking
which criteria is the most important to the decision making.
the biggest weight should be given to how the change will
effect.

5. 4) Developing alternatives: more alternatives more freedom to
make decision for the manager . Several ways to solve the
problem, that should not arise again in future.
5) Analyze the alternative: alternatives must be evaluated to see
how effective each would be by matching it with the objective set
by the organization.
6)Evaluating decision effectiveness: select best alternative.
Alternative must suit organizational objective. After thinking,
analysis and evaluation its time to implement .
Conversion of decision into action. After implementation it should
be monitored.

6. MAKING DECISIONS :
> Rationally.
> Bounded Rationality.
> The Role of Intuition.
Deekshitha

7. Rational Decision making :
It is a leverages objective data, logic and
analysis instead of subjectivity and intuition to
help to solve a problem or achieve a goal.

8. Assumptions of rationality:
1. The problem is clear and unambiguous.
2. A single and well defined goal is to be achieved.
3. All alternatives and consequences are known.
4. Preferences are clear.
5. Preferences are constant and stable.
6. No time or cost constraints exist.
7. Final choice will maximize payoff.

9. Bounded Rational decision making:
Bounded rationality is the theory that consumers have
limited rational decision making driven by 3 main factors –
1. cognitive limitations
2. Time constraints
3. imperfect information
example : when ordering at a restaurant, customers will
make sub optional decisions because they feel rushed by
the waiters.

10. Cognitive limitations
Information imperfection
Time Constraint
Bounded
Rationality
Satisficing
Sub-optimal
Decision

11. Escalation of commitment:
Since most decisions that managers make don’t fit
the assumptions of perfect rationally, they instead
make those decisions using a bounded rational
approach.

12. Role of intuition:
Intuitive decision making it’s a subconscious process of
making decisions on the basis of experience and
accumulated judgements.
Advantages:
1. A manager is able to make decisions quick and
effectively.
2. It helps to identify a goal in life.
3. Individual who trust their intuition are generally open
minded towards new ideas.
4. It can help read people.

14. ROLE OF EVIDENCE BASED
MANAGEMENT
NAME:MANVITH.T
1st MBA (BATCH -A)

15. WHAT IS EVIDENCE-BASED DECISION MAKING?
WHILE THE TERM IS WIDELY USED AND ACCEPTED, WE CONSIDER IT USEFUL TO
GROUND OUR DISCUSSION WITH THE FOLLOWING COMPREHENSIVE DEFINITION:
• Helps people make well informed decisions about policies, programs, and projects by
putting the best available evidence from research at the heart of policy development and
implementation.
• This approach stands in contrast to opinion-based policy, which relies heavily on either the
selective use of evidence or on the untested views of individuals or groups, often inspired
by ideological standpoints, prejudices, or speculative conjecture.
• Policy research that feeds into evidence-based decision making usually provides an in-
depth expert analysis of an emergent policy problem based on empirical data collected in
the target context.
• Analysis of the potential solutions available to address the problem is also provided.
• While there is a strong commitment to academic integrity and evidence, policy research .

16. Evidence-based decision making is driven by empirical analysis of policy problems.
The types of evidence commonly generated through the process of policy research are multiple and varied, but
often include some of the following:
• Impact evidence (reviewing effectiveness)
• Implementation evidence (determining effectiveness of implementation and delivery)
• Descriptive analytical evidence (measuring nature, size, and dynamics of problems, populations, and so on)
• Public attitudes and understanding (via methods such as opinion polls or focus groups)
• Statistical modeling (linear and logarithmic regression methods to make sound predictions)
• Economic evidence (cost-benefit/cost effectiveness of policies)
• Ethical evidence (social justice, redistribution, winners and losers).

17. TYPES OF DECISION MAKING OR DECISIONS
ROUTINE & STRATEGIC
DECISION
• Routine decisions are made
repetitively following certain
established rules ,procedures and
policies
• Strategic decisions are taken by top
management and middle
management
POLICY & OPERATING
DECISIONS
• Policy decisions are taken by top
management
• Operating decisions are taken by
lower management
ORGANISATIONAL &
PERSONAL DECISION
• Personal decisions are those which
a person takes in individual
capacity but not as a member of his
organization
• Organizational decisions are taken
by executive in his official capacity
and can be delegated to others
DHANYASHREE ANGRAJE

18. PROGRAMMED &NON
PROGRAMMED DECISION
MAKING
• Programmed decisions are
of a routine and repetitive
nature which are to be dealt
with according to specific
procedures
• Non programmed decisions
arise because of
unstructured problems
INDIVIDUAL AND GROUP
DECISIONS
• Decisions are taken by an
individual in organization
• Group decisions are taken
by a group of
organizational members
DHANYASHREE

19. DECISION MAKING CONDITIONS
LOW
HIGH MANAGERIAL
CONTROL
CERTAINTY RISK UNCERTAINTY
DHANYASHREE ANGRAJE

20. Decision Making Approaches
By
Maitri bhat

21. Quantitative Approach
The quantitative approach in decision making is all
about leveraging the scientific approach to identifying
the root cause of the problem and making well-informed
data-backed, and well-defined decisions.
The key techniques that are globally leveraged are:
Mathematical Programming – This approach revolves
around using a mathematical model for explaining the
problem area and determining the solution amongst the
alternatives available.

22. • Cost-Benefit Analysis- This is approach measures
the social and cost benefits of an action or a decision
whilst negating the cost associated with the decision.
• Linear Programming- This approach focuses on
optimizing resources using a linear equation.
• Expected Value- This approach concerns itself with
evaluating outcomes of certain actions based on the
concept of probability and possibility.
• Decision Tree- This approach revolves around
creating a concept map of actions, processes and
possible outcomes. This is applied in a case where
there is a potential for sequential decisions.

23. • Information Theory- ‘Information’ is the most
critical aspect of any decision. This theory offers
a mathematical foundation for understanding
the flow of information and communication
networks.

24. System Approach
• system approach is defined as: Management thinking
that emphasises the interdependence and interactive
nature of elements within and external to an
organization.
• There are six steps to making an effective decision:
1. Create a constructive environment.
2. Generate good alternatives.
3. Explore these alternatives.
4. Choose the best alternative.
5. Check your decision.
6. Communicate your decision, and take action.

25. Environment approach
• The quality of the decisions made in
an organization will dictate the success or failure of
the business. So all the available information and
alternatives must be studied before arriving at an
important decision. The process of decision making
will help a great deal. Another factor that affects
these decisions is the environment in which they are
taken. There are a few different types
of environments in which these decisions are made.

26. 1.] Certainty
• This means that all the information is available and at
hand. Such data is also easy to attain and not very
expensive to gather. So the manager has all the
information he may need to make an informed and well
thought out decision. All the alternatives and their
outcomes can also be analyzed and then the manager
chooses the best alternative.
• 2] Uncertainty
• In the decision making environment of uncertainty, the
information available to the manager is incomplete,
insufficient and often unreliable.
• In an uncertain environment, everything is in a state of
flux. Several external and random forces mean that the
environment is most unpredictable.

27. 3. Risk
Under the condition of risk, there is the possibility
of more than one event taking place. Which
means the manager has to first ascertain the
possibility and probability of the occurrence or
non-occurrence of the event.

28. Ethical decision inspire trust and with it fairness, responsibility and
care for others. The ethical decision making process recognizes these conditions
and requires reviewing all available options, eliminating unethical views and
choosing the best ethical alternative.
The following are five universal approaches to consider when making those
decision:
1.The Utilitarian Approach
This approach dictates that the action that is the most
ethical is the action that produces the most good and causes the least harm.
In other words , the decision that strikes the greatest balance between good
and evil .
2.The Right Approach
The Right Approach focuses on respect for human dignity.
This approach hold that our dignity is based on our ability to choose freely
how we live our lives , and that we have a moral rights to respect for our
choices as free, equal, and rational people ,and a moral duty to respect others
in the same way.
-sucharitha
• ETHICAL APPROACH

29. 3. The Fairness or Justice Approach
The fairness approach means that people
should be treated equally in an organization without any
discrimination.
4. The Common Good Approach
In this approach ,the manager will choose the
best alternative which is good and helpful in productivity to the
organization.
5. The Virtue Approach
The Virtue approach describe an assumption
that there are higher order of goodness to which man should
aspire and that only moral actions will help us to achieve that
higher level.

30. • Intuitive Approach
Intuitive decision means the decision taken by
manager is through knowledge ,experience, feelings ,emotions,
skills without any people proof or evidence.
• The Case Study Approach
A case study is a description of an actual
administrative situation involving a decision to be made or a problem
to be solved .
The general purpose of a case study is to describe
an individual situation (case). Example : a person ,business ,
organization ,or institution ,in detail identify the key issues of the
case.

31. DECISION MAKING STYLES
▪ Employees approach decision making in many different ways. Decision making is the
selection of a procedure to weigh alternatives and find a solution to a problem. In addition,
certain situations will require different approaches of decision making in order to be effective.
▪ The goal is to help you recognize your strengths and weaknesses so that you can become a
stronger, more confident decision maker.
The four decision-making styles include:
▪ Analytical
▪ Directive
▪ Conceptual
▪ Behaviour

32. TYPES OF DECISION MAKING
STYLES
1.Directive decision-making
▪ Directive decision-makers are very rational and have a low
tolerance for ambiguity. Their decisions are rooted in their own
knowledge, experience, and rationale, rather than going to
others for more information.
▪ The upside to this style is decision-making is quick, ownership
is clear, and it doesn’t require extra communication. However,
directive decisions can sometimes be made impulsively,
without all the necessary information.

33. 2.Conceptual decision-making
• conceptual decision-making style takes a more social approach
compared to the directive or analytic methods.
• Conceptual decision-makers encourage creative thinking
and collaboration and consider a broad array of perspectives. These
decision-makers are achievement-oriented and like to think far into the
future when making important decisions.
3.Behavioural decision-making
• Behavioural decision-makers try to make sure everyone works well
together.
• Like the conceptual style, behavioural decision-making is group-
oriented; however, rather than brainstorming potential solutions, the
group is given the options available to them.

34. 4.Analytic decision-makers:
• An analytic decision-maker will seek
information and advice from others to confirm
or deny their own knowledge.
• These decision-makers have a high tolerance for
ambiguity and are very adaptable, but they like
to control most aspects of the decision process.
This style is a well-rounded approach to
decision-making but can be time-consuming.

35. LINEAR AND NON LINEAR
THINKING:
The item pair sets are based upon the two
complementary thinking styles of our
balanced thinking model
▪ .Linear thinking as a preference for attending to
and making decisions from external data, information,
and facts.
▪ Nonlinear thinking as a preference for attending to
and making decisions from internal feelings.

36. Decision making biases and errors:
►A bias is a systematic error in decision-making
and thinking.
► It occurs when people process and interpret
information in the world around them.
► It affects the decisions and judgments that they
make.
-chethan nayak

37. Some common decision-making errors
and biases are as follows:
1.Overconfidence bias
2.Hindsight bias
3.Anchoring effect
4.Framing bias
5. Escalation of commitment
6.Immediate gratification
7.Selective perception
8.Confirmation bias
9.Availability bias
10.Representation bias
11.Randomness bias
12.self-serving bias

38. 1.Overconfidence bias:
► Individuals overestimate or have excessive confidence in their ability to predict
or foresee future events.
► This will cause the decision maker to unsupported or risky decisions.
2.Hindsight bias:
► This is the tendency of individuals to see past mistakes or occurrences as
obvious.
► After the event has occurred, individuals believe that they did or should have
seen it coming. This is important when evaluating others decisions.
e.g. stock market
3.Anchoring effect:
► Anchoring is when someone attaches themselves to an initial bit of information.
► In decision-making, it entails people placing too much emphasis on the single
piece of information. This can cause the decision maker to fail to consider other
important information.

39. 4.Framing bias:
► Framing bias is an individual's response to how a situation or decision is
presented.
► This can lead to individuals being deceived or manipulated by third
parties.
E.g. discount on purchase
5. Escalation of commitment:
► This is a tendency of individuals to continue to follow what has proven to
be a negative or unproductive course of action.
► Also known as the sunk cost fallacy or sunk cost bias, because the
tendency is motivated by an unwillingness to admit that they are wrong or
accept that resources are lost or wasted (they may be able to recover the
investment).
6.Immediate gratification:
► This is the tendency to make the immediacy of a potential solution to a
problem or situation the most important criteria.
► The result is the failure to consider all available options and settling for a
sub-part outcome form a decision that fails to deliver all available value.

40. 7.Selective perception:
► This is the tendency to see a particular situation or issue from a chosen
perspective. This is related to the team-based mentality.
► We see all situations or issues through a common lens that influences our
ability to understand alternative or conflicting points of view or alternatives.
8.Confirmation bias:
► Confirmation bias is to actively look for information or facts in a situation that
supports a particular choice or decision.
► This approach causes the decision maker to ignore evidence to the contrary.
This can also cause a failure to consider contrary information of positions.
9.Availability bias:
► Availability bias is a focus on immediate information or situations that come to
ones mind.
► The result is that we tend to believe the information or experience that we
recall or demonstrative or explicative of a situation or scenario. As such, a
decision is made on limited or superficial information.
E.g. Doctors/Consultants deciding based on prior results

41. 10.Representation bias:
► This is the tendency to believe a situation is indicative of a greater
tendency. That is, it is related to stereotyping.
► The decision maker believes that the situation represents all of the
characteristics of the population of which it is a part. It causes a failure
in the perception of ones ability to predict a given outcome or result.
11.Randomness bias:
► This is the tendency to see a pattern in otherwise random data or
information. We increasingly seek to harness new sources of
information in the decision-making process.
► Our search for meaning in information leads to an unreasonable
reliance on insignificant results.
12.Self-serving bias:
► This is one's tendency to attribute the positive results of a decision or
situation to ones own actions or decision.
► Likewise, it causes individuals to attribute negative consequences to
factors outside of our control. This can cause an inability to accurately
assess or affect a situation through decision making.

42. EFFECTIVE DECISION
MAKING
PRESENTED BY:
JABEEN TAJ
JAVERIA MUSKAN

43. MEANING OF EFFECTIVE DECISION
MAKING
➢ Effective executives do not make a great many decisions. They
concentrate on what is important. They try to make the few
important decisions on the highest level of conceptual
understanding.
➢ They try to find the constants in a situation, to think through what is
strategic and generic rather than to “solve problems.” They are,
therefore, not overly impressed by speed in decision making; rather,
they consider virtuosity in manipulating a great many variables a
symptom of sloppy thinking.
➢ They want to know what the decision is all about and what the
underlying realities are which it has to satisfy. They want impact
rather than technique. And they want to be sound rather than
clever.

44. What Can Prevent Effective
Decision-Making?
•Too Much Information
•Not Enough Information
•Too Many People
•Vested Interests
•Emotional Attachments
• No Emotional Attachment

45. 1.Not Enough Information :
• If you do not have enough information, it can feel like you are making a
decision without any basis.
2. Too Much Information :
● This problem can often be resolved by getting everyone together to decide
what information is really important and why, and by setting a clear
timescale for decision-making, including an information-gathering stage.
3.Too Many People :
● Making decisions by committee is difficult. Everyone has their own views,
and their own values.
● And while it’s important to know what these views are, and why and how
they are important, it may be essential for one person to take responsibility
for making a decision. Sometimes, any decision is better than none.

46. 4. Vested Interests :
● Decision-making processes often founder under the weight of vested interests.
● These vested interests are often not overtly expressed, but may be a crucial
blockage
5. Emotional Attachments :
● People are often very attached to the status quo. Decisions tend to involve the
prospect of change, which many people find difficult.
● For more about overcoming this, see our pages on Change Management, but also
remember that ‘deciding not to decide’ is also a decision.
6. No Emotional Attachment :
● Sometimes it’s difficult to make a decision because you just don’t care one way
or the other.
● In this case, a structured decision-making process can often help by identifying
some very real pros and cons of particular actions, that perhaps you hadn’t
thought about before.

47. The efforts of the management are to take correct decisions. A
wrong decision at any level of management may create difficulties
for the whole business. In spite of best efforts there are certain
problems in decision-making.
•1.Correctness of Decisions
•2.Timing of Decision
•3.Effective Communication of Decisions
•4.Participation in Decision-Making
•5.Decision-Environment
•6.Implementation of Decision

48. EFFECTIVE DECISION
Correctness of Decisions:
❖ Whether the decisions taken are correct or not is the first problem faced by
the management.
❖ If the decision is not correct then it will mean a waste of money and efforts.
❖ The correctness of a decision depends on the caliber of decision-maker,
information available and its analysis.
Timing of Decision:
❖ Timing of decisions is the other difficulty faced by management. It is
important to take decisions at the most opportune time.
❖ The determination of that time in itself is a problem. The decisions will be in
vain if not taken at right time.

49. Effective Communication of Decisions:
● The communication of decisions to the persons for whom they have
been taken is another administrative problem faced by the
management.
● The decisions should be communicated in a language in which they are
well understood by the receiver.
Participation in Decision-Making:
● The best way of arriving at important decisions is to get the views of
concerned persons before finalizing them.
● Different viewpoints will give a wider thought to the problem and its
analysis. The general tendency in management is to keep decision-making
at top level only.
● A few persons are given the authority of making decisions. This type of
thinking will create more problems in implementing them.

50. Decision-Environment:
● The organizational and physical environment prevailing in the
business will have an influence on decision-making process.
● If the environment is conducive then there will be proper co-
operation and mutual understanding among various persons.
● The decisions will be accepted in a good spirit and will be honestly
implemented. It will also provide scope for research and creative
thinking.
Implementation of Decision:
● The implementation of decisions is the other difficulty faced by
management. Once a decision is taken then all efforts should be made
honestly to implement it.
● The manager and subordinates should help in proper implementation
of decisions. Manager may consult staff persons or specialists from
outside but final decision will be his own.

51. Reference books:
TOPIC Reference book and website
DECISION MAKING PROCESS https://study.com/learn/lesson/decision-making-process-steps-
importance.html
https://m.youtube.com/watch?v=Qg1NvbZVlXE
MAKING DECISION https://boycewire.com/bounded-rationality-definition/
Management- Robbins & Coulter, Prentice Hall of Hall of India, New Delhi.
ROLE OF EVIDENCE BASED
MANAGEMENT
https://thoughtexchange.com/blog/what-is-evidence-based-
management/#:~:text=Evidence%2Dbased%20management%20is%20an,avail
able%20evidence%20to%20make%20decisions
TYPES OF DECISION AND DECISION
MAKING CONDITIONS
Principles and practice of management - M Prasad
Management - J.P.mahajan
DECISION MAKING APPROACHES https://www.hugheseducation.com/blogs/quantitative-approach-in-decision-
making
http://www.toolshero.com/
DECISION MAKING STYLES Management -stephen
DECISION MAKING BIASES AND
ERRORS
https://thebusinessprofessor.com/en_US/management-leadership-
organizational-behavior/common-biases-and-errors-in-decision-making
EFFECTIVE DECISION MAKING Management - J.P.mahajan

52. THANK YOU