Individual decision making

TRINITY INSTITUTE OF PROFESSIONAL STUDIES

Sector – 9, Dwarka Institutional Area, New Delhi-75Affiliated Institution of G.G.S.IP.U, Delhi

ORGANISATIONAL BEHAVIOUR (OB)

BBA201

INDIVIDUAL DECISION MAKINGPINKI BHARDWAJ

ASSISTANT PROFESSOR

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

Decision –making is the “selection of a course of action from among alternatives; it is the core of planning.” - Koontz and Weihrich

Decision-making means selecting a course of action out of alternative courses to solve a problem. Decisions may be major or minor, strategic or operational, long-term or short-term. They are made for each functional area at each level. The importance of decisions, however, varies at each level.

Decision making is a modest attempt to match environmental opportunities with organisation’s strengths. It is based on forecasts and assumptions about environmental factors.

DECISION MAKING

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

FEATURES OF DECISION MAKING

Decision –making has the following features:1. Decision-making is goal-oriented. The purpose of decision is to

achieve a goal; sectional, departmental and organisational.2. It is required for every managerial function though it is closely

related to planning.3. It is a process of choice; choosing a course of action out of various

courses to solve a specific problem.4. Problem-solving is the basis for decision making as decisions are

made to solve problems.5. Decisions are made to solve organisational problems and exploit

environmental opportunities.6. It is a pervasive process.

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

FEATURES OF DECISION MAKING

7. Decisions are made at all levels in the organisation; though nature and importance of decisions vary at different levels.

8. It is required for every situation-certainty, risk and uncertainty.9. It is situational in nature. Different situations require different

decisions.10. It is a continuous process. Managers continuously evaluate

organisational activities and find problems that require decision making.

11. It is an intellectual process. Managers use judgement, knowledge and creativity to develop solutions to the problem.

12. A manager is oriented towards making decisions rather than performing the actions personally; actions are carried out by others.

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

PROCESS OF DECISION MAKING

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

TYPES OF DECISIONS

Decisions can broadly be grouped into two categories:1. Programmed Decisions: Decisions related to structured situations,

where the problem is more or less routine and repetitive in nature are known as programmed decisions.

2. Non- Programmed Decisions: These decisions are taken in unstructured situations which reflect novel, ill-defined and complex problems. The problems are non-recurring or exceptional in nature. These decisions involve fair degree of uncertainty since outcomes of decisions are not always known.

Different types of programmed and non- programmed decisions is given below:

1. Organisational and personal decisions: these decisions reflect use of authority. Decisions taken in interest of the organisation are

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

TYPES OF DECISIONS

organisational decisions and decisions taken for personal interests are personal decisions.

2. Operational and strategic Decisions: These decisions reflect scope of decision making processes. Operational decisions are taken as a matter of routine. They relate to daily operations and aim to achieve short term objectives of the firm. Decisions related to important and non-recurring problems are called strategic decisions. They relate to the long term goals of the company, define relationship of the organisation with the environment and are risky in nature.

3. Research and crisis-intuitive Decisions: These decisions reflect urgency of decision-making. Decisions which involve regular survey of the market are research decisions and decisions made under situations of crisis or emergency are crisis- intuitive decisions.

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

TYPES OF DECISIONS

4. Opportunity and Problem-solving decisions: these decisions reflect foresightedness. Managers forecast opportunities to promote organisational growth. The decision to grow and diversify in the market is an opportunity decisions. Problem solving decisions solves a specific problem.

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

TECHNIQUES OF DECISION MAKING

Traditional Techniques: These techniques are divided into two groups:1. Traditional techniques to make programmed decisions.a. Habitsb. Operating proceduresc. Organisation Structure2. Traditional techniques for making non-programmed decisions: managers

solve unstructured, novel and non-repetitive problems through judgement, intuition and creativity.

Modern Techniques:1. Modern techniques for making programmed decisions:a. Break-even techniqueb. Inventory models

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

TECHNIQUES OF DECISION MAKING

c. Linear programming

d. Simulation

e. Probability theory

f. Decision tree

g. Queuing theory

h. Gaming theory

i. Network theory

2. Modern techniques for making programmed decisions:

a. Creative Techniques

i. Brainstorming

ii. Nominal Group Technique

TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75

TECHNIQUES OF DECISION MAKING

iii Delphi techniqueb. Participative techniquesc. Heuristic techniques