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What is the Process of Decision Making?

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It is not possible to take a decision in isolation as every decision is impacted by the past experiences and also by the present conditions and future expectations. At the same time, once a decision has been taken, it is very difficult to reverse it. Therefore it is important to discuss the problem and then take the appropriate decision after all available alternatives have been considered. In this way, the steps that are involved in the process of decision-making can be described as follows:

1. Defining the Problem: the first step that is related with the process of decision-making is to find the real problem. There are many cases when it is not easy to find the real problem. Therefore, the managers should see what the real reason behind the trouble is and what can be the possible solutions to the problem. On the other hand, if the problem is not defined correctly, the decision made for such a problem will also be wrong and as a result, the money and efforts spent to find the decision will be wasted. At the same time, new problems may also be created by the wrong decision instead of solving the real problem.

Before a manager tries to define the problem, it is necessary that the manager should identify the strategic or the critical factor of the problem. It has been mentioned that the theory of strategic factor is necessary when it comes to the application of the process of decision-making. It has also been emphasized that in the process of decision-making, the analysis that has to be made by the manager is in reality a search for strategic factors. These factors can be the basic cause of obstacles due to which it had become difficult to find the proper solution to a problem. On the other hand, when the problem has been properly defined by the managers, then it becomes easy for the managers to solve the problem. Therefore, the determination of the problem is the first step in the process of decision-making.

2. Analyzing the Problem: After a problem has been identified by the managers, the next step in the process of decision-making is to analyze the problem. For this purpose, the managers should gather all information related with the problem and then they are required to decide if the information available to them is sufficient for taking a decision. It has been generally seen that the managers do not have the sufficient information for making a particular decision. For example in some cases, it may be too costly to get the required information. It has been said that for the purpose of making a sound decision, it is not necessary that the managers should have all the facts but it is very important that the managers should be aware of the fact that sufficient information is not available to them so that they can be aware of the level of risk that is involved in a particular decision and also the level of rigidity and precision that can be adopted in the proposed course of action. In this way, whatever information is available to the managers, it should be used for the purpose of analyzing the problem. On the other hand, if sufficient information is not available to the managers, then the level of risk related with the decision should be analyzed.

3. The Alternative Courses of Action Available: A number of solutions are available in case of every problem. On the other hand, if only one solution would have been available regarding a particular problem, there would have been no need for making a decision. Therefore, it is the responsibility of the manager to make efforts to discover that these are the alternatives that are available so that satisfactory results can be achieved while making a decision. Unless several alternatives have been developed by a manager, it is likely that the manager will not be able to make the most appropriate decision. At the same time, it also needs to be noted that even in most desperate situations, several alternatives can be available. Therefore, it is very important that the managers evaluate all the alternatives that are available to them and then make the most appropriate decision. Unless the managers have developed all the possible alternatives, the most appropriate decision cannot be made.

4. Evaluating the Alternatives: After all the available alternatives have been identified by the managers, the next step in the process of decision-making is to evaluate all the alternatives available and then to select the most appropriate one. For this purpose, the managers have to consider the advantages and disadvantages of various alternatives. For this purpose the pros and cons of each alternative has to be evaluated. With the help of this process, the managers can foresee the risk that may be involved in case of each alternative. The managers should evaluate each alternative in terms of the time and money that has to be spent on them. This helps the managers in selecting the alternative that is most economical. A decision is easy to make when it becomes clear that the consequences of a particular alternative is favorable as compared to the other alternatives. On the other hand, when several alternatives are available that have similar advantages, it is difficult for the managers to make their choice. Therefore in such cases, the managers can also combine two or more alternatives. In the same way, there can be a situation where none of the alternatives present before the managers can provide favorable consequences. Therefore, in such a case, the manager may have to make a significant decision of not accepting any of the alternatives available. At the same time, the manager may also try to develop new alternatives.

5. Experience: All managers are aware of the significance of experience in making decisions. The reason is that past experience in making decisions acts as a guide for the managers. The problems and the difficulties that were faced by the managers in the past,help the managers in taking steps in advance so that these problems are not faced again. However, the managers should not blindly follow the past experience. Therefore only if the circumstances in the past as well as at present are exactly the same, only then the managers should select the alternatives from the past. On the other hand, if the two situations are different, the alternative selected in the past may not be the most appropriate in present. Therefore, in such a case, the same decision should not be made by the managers. While the managers rely on the experience, they should also evaluate the situation that was present in the past or in present and at the same time, the future effect of the decision should also be evaluated. In this way, although the past experience can help the managers in making a decision but it should not be the only factor on which the managers rely upon.

6. Experimentation: Generally, in case of a scientific study, experimentation is used. In this case, the different available alternatives are put in practice and therefore the alternative that provides the best results is selected. But in case of management, this type of experimentation cannot be relied upon by the managers. The reason is that it will be very costly to put all the available alternatives to practice. Still, this type of experimentation can be used in a limited way. Therefore whenever any new product is launched in the market, the management may decide to launch the product only in a limited area for the purpose of knowing the reaction of the consumers. In the same way, if the management of the organization is willing to go for a new setup, it may decide that the setup should first of all be applied in a particular branch only. Therefore, the managers should always take their decisions on the basis of the facts available to them as well as on the basis of the analysis of results of such experimentation.

7: Taking the Decision and Following It: When the managers have evaluated the various alternatives available to them, they can take a final decision. This decision has to be communicated to all the persons who have the responsibility to take action regarding the decision. For this purpose, the follow-up action taken by the managers regarding a decision can show if the decision taken by them was based on any wrong premises or facts. If this is the case, the managers can review the decision and can also make the required changes. In this way, it is also very important that the managers follow up the decision taken by them.

This article has been written by KJ Singh a MBA Graduate from a prestigious Business School In India
Article Published:April 2, 2016
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