Decision Making in Management

1. Decision Making
Presented by
 Naseeb ul Hassan
 Muhammad Ali kayani
 Abdul Raheem Abbasi

2. Decision Making

3. Decision Making
 Decision Making is the process of selection of
course of action from among alternatives
 Decision making is a core of planning

4. Rationality in Decision Making
 Making consistent, value maximizing choices
within specific constraints
 A logical, multi-step model for choosing
between alternatives that follows an orderly
path from problem identification through
solution.
 Effective decision making must be rational

5. Limited Rationality
 Human mind has only limited capacity to
evaluate and process the information that is
available
 Satisfy … good enough

6. Development of Alternatives
Identifying viable Alternatives
Alternatives are listed (without
evaluation)
Compare them with limiting factors
that stand in the way of
accomplishing desired objective.

7. Evaluating Alternative
 Quantitative --measurable/Fixed e.g. cost
time, and budget etc.
 Qualitative--- Non measurable/Intangible e.g.
moral of employee/ labor relation

8. Marginal Analysis
 Evaluating alternatives involves evaluating
additional revenue arising from additional cost
 Additional revenue = additional cost
 Linear relation between revenue and cost

9. Cost-Effectiveness Analysis
 Seeks best ratio of benefit and cost
 Finding least costly way to reaching an
objective
 Getting maximum benefit for given
expenditure

10. Selecting Alternative

11. Experience
 Reliance on past decisions
 Experience is the best teacher
 It could be dangerous
 Good decisions must be evaluate on the basis
of future effect whereas experience relates to
the past
 Analysis of experience in the light of current
situation

12. Experimentation
 Try one alternative and then see what
happen?
 Testing in limited sphere.
 Expensive ---- involve cost/capital
 Results may doubtful

13. Research and Analysis
 Pencil-and-Paper or computer-and-printout
method
 When major decisions are involved
 Less expensive than experimentation
 E.g. (3-D model of building)

14. Programmed Decisions
 Used for structure and routine work
 Specifications and rules that tell them how to
work in organization
 Almost are used in every organization

15. Non-Programmed Decisions
Used for unstructured novel and ill
defined situation of a nonrecurring
nature
These decision made by top level
management

16. Decision Making
 Under Certainty
• People are reasonably sure about what will happen when
they make decision
 Under Uncertainty
• People are very unsure about results
 Under Risk
• Factual information may exist, but it may be incomplete

17. Creativity and Innovation
 Creative Process
• Unconscious Scanning
• Intuition
• Insight
• Logical formation

18. Invention And Innovation
 INVENTION
• Development or discovery of something new
 INNOVATION
• Enhancement, adaption or commercialization
of new products, services

19. Conclusion / Recommendation
 All decision-making involves elements of risk and reward. For
every decision there are risks. Many organizations are
structured so that major decisions are taken at the highest
levels. This is because decisions at the top can have major
effects for the whole organization. At the tactical and
operational levels, the risks are smaller. People at all levels
are encouraged and empowered to make decisions informed
by accurate information. By using the skills of people by
giving ongoing support and training, is able to rely on good
quality decision-making at all levels. That is how they make
more effective, secure and correct decisions.

20. Thanks for
Watching