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Answered: - Decision making process as explained by different authors

Decision making process as explained by different authors in entrepreneurship and communication studies



What is Decision Making?


Some Definitions


1. Decision making is the study of identifying and choosing alternatives based on the values


and preferences of the decision maker.


Making a decision implies that there are alternative choices to be considered, and in such a case


we want not only to identify as many of these alternatives as possible but to choose the one that


(1) has the highest probability of success or effectiveness and (2) best fits with our goals, desires,


lifestyle, values, and so on. The two important ideas here are that first, there must be some


genuine alternatives to choose from among. Note that "Do it" or "Don't do it" does not qualify as


a set of alternatives. Only "Do this" or "Do something else" really qualifies. Second, every


decision must be made in the light of some standard of judgment. This standard usually gets


expressed in the form of criteria, which reflect the values and preferences of the decision maker.


These values and preferences are often influenced by corporate rules or culture, law, best


practices, and so forth.



2. Decision making is the process of sufficiently reducing uncertainty and doubt about


alternatives to allow a reasonable choice to be made from among them. This definition


stresses the information-gathering function of decision making. It should be noted here that


uncertainty is reduced rather than eliminated. Very few decisions are made with absolute


certainty because complete knowledge about all the alternatives is seldom possible. Thus, every


decision involves a certain amount of risk. If there is no uncertainty, you do not have a decision;


you have an algorithm--a set of steps or a recipe that is followed to bring about a fixed result.



Quite literally, organizations operate by people making decisions. A manager plans, organizes,


staffs, leads, and controls her team by executing decisions. The effectiveness and quality of those


decisions determine how successful a manager will be.


Managers are constantly called upon to make decisions in order to solve problems. Decision


making and problem solving are ongoing processes of evaluating situations or problems,


considering alternatives, making choices, and following them up with the necessary actions.


Sometimes the decision?making process is extremely short, and mental reflection is essentially


instantaneous. In other situations, the process can drag on for weeks or even months. The entire


decision?making process is dependent upon the right information being available to the right


people at the right times.






Decision Making Process


The decision?making process involves the following steps:


1. Define the problem.


2. Identify limiting factors.


3. Develop potential alternatives.


4. Analyze the alternatives.


5. Select the best alternative.


6. Implement the decision.


7. Establish a control and evaluation system.



Define the problem


The decision?making process begins when a manager identifies the real problem. The accurate


definition of the problem affects all the steps that follow; if the problem is inaccurately defined,


every step in the decision?making process will be based on an incorrect starting point. One way


that a manager can help determine the true problem in a situation is by identifying the problem


separately from its symptoms.



Concentrate on the problem at hand. This rule keeps the discussion very specific and avoids


the group's tendency to address the events leading up to the current problem.


Entertain all ideas. In fact, the more ideas that come up, the better. In other words, there are no


bad ideas. Encouragement of the group to freely offer all thoughts on the subject is important.


Participants should be encouraged to present ideas no matter how ridiculous they seem, because


such ideas may spark a creative thought on the part of someone else.


Refrain from allowing members to evaluate others' ideas on the spot. All judgments should


be deferred until all thoughts are presented, and the group concurs on the best ideas.









Factors Affecting Decision Making


Perception Issues




Perception Issues ? perception can be described as the way in which individuals interpret


their environment. An individual?s perception can influence how they make decisions and


solve problems. For example, when information about a problem needs to be gathered the


individual?s perception will impact on where the information is sought and the type of


information regarded as relevant.



Issues within the organization




A number of organizational issues can impact on the decision making process. These


issues include: policies and procedures, organizational hierarchy and organizational





Issues within the environment


Environmental issues are the external factors that affect the organization. The types of external


factors that can have an effect on decision making: the market in which the organization


operations, the economy, government legislation, customers? reaction to the organization?s


products and services


Common Decision making mistakes








Only hearing and seeing what we want. Each individual has their own unique set of


preferences or biases which blinker them to certain information. The best way to deal


with this problem is to identify your preferences and biases while attempting to be open


to the information around you.


Placing too great a reliance on the information you receive from others. Often we rely on


certain individuals to provide support and guidance. This may be a suitable course of


action in many cases. However, if the individual is not closely involved in the problem


situation they may not have the necessary information or knowledge to help make the




Placing too little emphasis on the information you receive from others. This issue can


easily occur in a team situation. In many cases the team members are the people who are


most closely involved in a problem situation and they often have the most pertinent


information in relation to the problem.








Ignoring your intuition. On many occasions we are actually aware at a subconscious level


of the correct course of action. Unfortunately, we often tend to ignore our intuition or gut


feeling, the sixth sense or whatever we may choose to call it.



Decision Making Levels


Operational decisions are the day-to-day decisions needed to operate the organization.


Operational decisions are more routine and follow known rules. How many? To what


specification? These decisions involve more limited resources, have a shorter-term application


and can be taken by middle or first line managers.


Tactical decisions, on the other hand, are those decisions that involve formulating and


implementing policies for the organization. Tactical decisions are about how to manage


performance to achieve the strategy. What resources are needed? What is the timescale? These


decisions are distinctive but within clearer boundaries. They may involve significant resources,


have medium-term implications and may be taken by senior or middle managers.


Strategic decisions are made by top managers and involve setting long-term organizational


goals and objectives. Strategic decisions are big choices of identity and direction. Who are we?


Where are we heading? These decisions are often complex and multi-dimensional. They may


involve large sums of money, have a long-term impact and are usually taken by senior


management.Strategic decisions affect the business direction of a company and help determine


what markets to play in and how. Because of the long-term effects, these types of decisions are


made less frequently, in some cases every five to ten years. The decision to get out of the


clothing business and sell outdoor sports equipment instead is a strategic decision with long-term


consequences. Strategic decisions are generally unstructured. There are few foolproof procedures


for determining corporate strategy and deciding what business to be in.







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