decision making

1. Decision
Making
PRESENTED BY
Geetika Rajput
Jatin Kumar
Harsh Vardhan Parashar
Hitesh
Hrithik Goel

2. Decisions and Decision Making?
A decision is a conclusion or resolution reached
after consideration.
Decision making can be defined as the process
of choosing between alternatives to achieve a
goal.
It is a soft skill that involves choosing a possible
solution to a problem.
.

3. Factors Affecting Decision Making
Some major factors that affect decision making are -
Prejudice
.
1
2
3
Personal Habits
4
5
6
Attributes of Risk &
Uncertainty
Information Inputs
Cognitive Constraints
Social & Cultural
Influence

4. Information Inputs
These attitudes are developed in a person, partly due to certain personal characteristics and
partly due to organizational characteristics. If the organizational policy is such that it penalizes
losses more than it rewards gains, then the decision-maker would tend to avoid the alternatives
that have some chances of failure.
Prejudice
Prejudice and bias are introduced in our decisions by our perceptual processes and may cause
us to make ineffective decisions. First, perception is highly selective, which means that we only
accept what we want to accept, and hence only such type of information filters down to our
senses. Second, perception is highly subjective, meaning that information gets distorted in order
to be consistent with our pre-established beliefs, attitudes, and values.
Risk and Uncertainty
It is very important to have adequate and accurate information about the situation for decision
making otherwise the quality of the decision will suffer. Less information is as dangerous as too
much information. Some highly authoritative individuals do make decisions on the basis of
comparatively less information when compared to more conservative decision-makers.

5. Thus, a manager may avoid a potentially good opportunity if there is a slight chance of a loss. The
personal characteristics of a decision-maker regarding his attitudes towards risk-taking affect the
success of the decision. The risk-taking attitude is influenced by the following variables:
A. The intelligence of the decision-maker: Higher intelligence generally results in highly
conservative attitudes and highly conservative decision-makers take low risks. There are others
who are more willing to take calculated risks if the potential rewards are larger and there is some
chance of success.
B. The expectation of the decision-maker: People with high expectations are generally highly
optimistic in nature and are willing to make decisions even with less information. The decision-
makers with low expectations of success will require more and more information to decide upon a
course of action.
C. Time constraints: As the complexity of the personal habits of the decision-maker and the
complexity of the decision variables increase, so does the time required to make a rational
decision.
Even though there are certain individuals who work best under time pressures and may
outperform others under severe time constraints, most people, require lime to gather all the
available information for evaluation purposes.

6. Personal Habits
The social norms exert considerable influence on the style of decision-maker. In other words, a
social norm is a standard and accepted way of making judgements. Similarly, cultural upbringing
and various cultural dimensions have a profound impact on the decision-making style of an
individual.
Cognitive Constraints
A human brain which is the source of creativity, intelligence, thinking and decision making has a limited
capacity in a number of ways. Except for some unique circumstances, our memory is short term. Also, we
cannot perform more than a limited number of calculations in our head. Thus, psychologically we are often
baffled while making decisions and are really never sure if our choice of the alternative was correct or optimal.
Social and Cultural Influence
Personal habits of the decision-maker, formed through social environmental influences and
personal perceptual processes must be studied in order to predict his decision making. Some
people stick to their decisions even when these decisions are not optimal.

7. 6 C’s of Decision Making
There are 6 C’s which determine decision making. These are -
Construct a clear picture of what must be done precisely.
Construct
Collect information of alternatives that meet the requirements.
Collect
Compile a list of requirements that must be met.
Compile

8. 6 C’s of Decision Making
There are 6 C’s which determine decision making. These are -
Compare alternatives that meet the requirements.
Compare
Commit to a decision and follow through with it.
Commit
Consider ‘what might go wrong’ factor for each alternative.
Consider

9. Types of Decisions
Individual Decisions
People oriented
Task oriented
Group Decisions
Delphi-method
Nominal
Brainstorming

10. Individual
Decisions
Individual decisions are those decisions that are
left in the hands of one person to make them on
behalf of the others. In this case, advantages
and disadvantages of individual decisions are
discussed. Let’s discuss more about it.
People
Oriented
People oriented decision are the decisions that
cares about their employees and is invested in
their success.
Task
Oriented
Task oriented decisions focuses on getting a job
done without worrying about the personal
development or satisfaction of the individual
team members.

11. Group
Decision
s
Group decisions making techniques are different ways to
approach in making a decision during a group discussion with
your team-mates.
Brainstorming
Technique
A brainstorming session is a type of group decision making
that can be really effective when you need to raise potential
ideas and solutions.
The Delphi
Technique
is a good option when you need to reach a group consensus
for a major decision. This group decision-making process takes
all of the ideas generated by your team and compiles them for
the leader of the group to break down into a smaller list of
possible approaches
The Nominal
Technique
builds on the brainstorming discussion by including a voting
process at the end. If the topic is more sensitive or
controversial, you may want to engage your team with a survey
with the option to remain anonymous

12. Importance of Decision Making
•Importance of decision making in achieving objectives
The importance of decision-making skills in a business is that it assists in achieving organizational objectives
by utilizing company resources, looking at best alternatives and keeping the workforce under him satisfied.
•Importance of decision making in dealing with problems
A person entrusted with making decisions has to be strong to make, implement and go through his decision
even if people are against it and hate him for doing so. It is important to have the necessary confidence and
belief and make sure to follow the orders as per his directive without worrying about the backlash for his
decision.
•Importance of decision making in increasing efficiency
One of the most in-demand skills in an organization is the ability to make good decisions especially when
things are going downhill or look shaky. It is imperative to seek optimal efficiency if you want to achieve
company goals and take the entity to greater heights.
Decision making is the ability to analyze the available options and select the best action plan to complete the
given task. It is an integral part of human life in both the personal and professional world and requires
making a choice that will result in defining the outcome or the result because of that decision.

13. Decision Making Process
The decision making process involves eight simple steps.
 Identify the problem.
 Identify decision criteria.
 Allocating weights to criteria.
 Developing alternatives.
 Analysing alternatives.
 Selecting an alternative.
 Implementing the alternative.
 Evaluating decision effectiveness.

14. The decision-making process begins with the existence of a problem or, more specifically, a discrepancy
between an existing and a desired state of affairs.
Problem identification is subjective. Furthermore, the manager who mistakenly resolves the wrong problem
perfectly is likely to perform just as poorly as the manager who doesn't identify the right problem and does
nothing. Problem identification isn't simple or insignificant.3 Before something can be characterized as a
problem, managers have to be aware of the problem, be under pressure to take action, and have the
resources needed to take action.4 How do managers become aware of a problem? They obviously have to
compare their current state of affairs against where they want to be. If they're not where they want to be or if
things aren't going as they should, then a problem (or discrepancy) exists.
managers aren't likely to characterize something as a problem if they perceive that they don't have the
authority, budget, information, or other resources necessary to act on it. When managers become aware of a
problem and are under pressure to act but feel they have inadequate resources, they usually describe the
situation as one in which unrealistic expectations are being placed on them.
Step 1 - Identify The Problem

15. Step 2 - Identify The Criteria
Once a manager has identified a problem that needs attention, the decision criteria important to resolving the problem
must be identified. That is, managers must determine what's relevant in making a decision. In our computer buying
example, Joan has to assess what factors are relevant to her decision. These might include criteria such as price, product
model and manufacturer, standard features, optional equipment, service warranties, repair record, and service support
after purchase.
After careful consideration, Joan decides that price, weight, warranties, screen type, reliability, and screen size are the
relevant criteria in her decision. Whether they are explicitly stated or not, every decision maker has criteria that guide
his or her decisions. Note that, in this step in the decision-making process, what isn't identified is as important as what
is. If Joan doesn't consider a service warranty a decision criterion, then it will not influence her final choice of
computers.

16. Step 3 - Allocating weights to criteria
The criteria identified in Step 2 aren't all equally important, so the decision maker must weight the items in order to
give them the correct priority in the decision. How do you weight criteria? A simple approach is to give the most
important criterion a weight of 10 and then assign weights to the rest against that standard. Thus, a criterion with a
weight of 10 would be twice as important as one given a 5.
The idea is to use your personal preferences to prioritize the criteria you identified in Step 2 by assigning a weight to
each.
CRITERION WEIGHTS
Reliability 10
Screen size 8
Warranty Period 5
Weight 5
Price 4
Screen type 3

17. Step 4 - Developing alternatives
The fourth step requires the decision maker to list the viable alternatives that could resolve the problem. No attempt is
made in this step to evaluate the alternatives, only to list them. Our sales manager, identified eight laptop models as
viable choices including :-
• Acer TravelMate 734TL
• Compaq Presario 1800XL186
• Gateway Solo 2550LS
• Hewlett-Packard Omnibook 900
• Micromedia Computers Millennium 3000
• NEC Direct Versa Note VX 14.1
• Sony Vaio PCG-X18
• Toshiba Satellite Pro 4280.

18. Step 5 - Analysing alternatives
Once the alternatives have been identified, the decision maker must critically analyze each one. Each alternative is
evaluated by appraising it against the criteria established in Steps 2 and 3. From this comparison, the strengths
and weaknesses of each alternative become evident. Exhibit 6.3 shows the assessed values that Joan gave each of
her eight alternatives after she had talked to some computer experts and read the latest information from
computer magazines.
MODEL RELIABILITY SCREEN SIZE WARRANTY WEIGHT PRICE SCREE
N
TYPE
Acer 8 3 5 10 3 5
Compaq 8 5 10 5 6 6
Gateway 10 8 5 10 3 10
Hewlett 8 5 5 10 3 10
Micromedi
a
6 8 5 10 6 10
NEC 10 8 5 5 3 10
Sony 2 10 5 10 10 10
Toshiba 4 10 5 10 10 5

19. MODEL RELIABILI
TY
SCREEN
SIZE
WARRANTY WEIGHT PRICE SCREEN
TYPE
TOTAL
Acer 80 24 25 50 12 15 206
Compaq 80 40 50 25 24 15 234
Gateway 100 64 25 50 10 30 281
Hewlett 80 40 25 50 10 30 237
Microme
dia
60 64 25 50 12 30 253
NEC 100 64 25 25 12 30 256
Sony 20 80 25 50 40 30 245
Toshiba 40 80 25 50 40 15 250
Previous table represents only an assessment of the eight alternatives against the decision
criteria. It doesn't reflect the weighting done in Step 3. If one choice had scored 10 on every
criterion, you wouldn't need to consider the weights. Similarly, if the weights were all equal, you
could evaluate each alternative merely by summing up the appropriate lines in this table. For
instance, the Acer TravelMate 734TL would have a score of 34, and the Sony Vaio PCG-X18
would have a score of 47. However, if you multiply each alternative assessment by its weight.

20. Step 6 - Selecting An Alternative
The sixth step is the important act of choosing the best alternative from among those
considered. We have determined all the pertinent criteria in the decision, weighted
them, and identified and analyzed viable alternatives. Now we merely have to choose
the alternative that generated the highest score in Step 5. In our computer purchase
example ,Joan would choose the Gateway Solo 2550 LS computer since it scored highest
(281 points) on the basis of the criteria identified, the weights given to the criteria, and
Joan's assessment of each computer's ranking on the criteria. It's the "best" alternative
and the one she should choose.

21. Decision
Tree

22. Step 7 - Implementing The Alternative
Although the choice process is completed in the previous step, the decision may still fail if
it isn't implemented properly. Therefore, Step 7 is concerned with putting the decision into
action. Implementation involves conveying the decision to those affected by it and getting
their commitment to it.
If the people who must carry out a decision participate in the process, they're more likely
to enthusiastically support the outcome than if they are just told what to do. For instance,
in our decision example, if the sales representatives had participated in the purchase
decision, they'd probably enthusiastically support the computer model chosen and any
new training necessary.

23. Step 8 - Evaluating decision effectiveness
The last step in the decision-making process involves appraising the outcome of the decision
to see if the problem has been resolved. Did the alternative chosen in Step 6 and
implemented in Step 7 accomplish the desired result?
What would happen if, as a result of this evaluation, the problem still existed? The manager
would then need to carefully assess what went wrong. Was the problem incorrectly
defined? Were errors made in the evaluation of the various alternatives? Was the right
alternative selected but poorly implemented? Answers to questions such as these might
send the manager back to one of the earlier steps. It might even require starting the whole
decision process over.

24. Decision Making Models
Social Man Model
Bounded Rationality Model
Economic Man Model
1
2
3

25. Economic Man Model
• Economic man model is also known as Econologic Model.
• This model rests on two assumptions:
(1) It assumes people are economically rational; and
(2) People attempt to maximise outcomes in an orderly and sequential process
• Economic man model exists when people attempt to maximise objectively
measured advantage, such as money or units of goods produced. That is, it is
assumed that people will select the decision or course of action that has the
greatest advantage or payoff from among the many alternatives. It is also
assumed that they go about this search in a planned, orderly, and logical fashion.

26. Bounded Rationality Model
• Bounded Rationality Model is also known as the administrative man model,
which is presented by Simon.
• As the name implies, this model does not assume individual rationality in the
decision,' process.
• Instead, it assumes that people, while they may seek the best solution, usually
settle for much less because the decisions they confront typically demand
greater information processing capabilities than they possess. They seek a kind
of bounded (for limited) rationality in decisions
• Simply, In this people look for a solution that is acceptable and their search
behaviour is sequential in nature(evaluating one or two solutions at a time).

27. Social Man Model
• Social Man Model has been developed by classical psychologists.
• This model states that men being a bundle of feelings and emotions is guided by
his unconscious desires and he is also subject to social pressures and influences.
• Hence, such a person is not capable of making rational management decisions
• Similarly in organization, Strong social pressures can force managers to choose
wrong alternatives.
• In such case, their decisions cannot be termed as organizationally rational,
though they may be personally rational, being oriented to their personal goals.

28. Case Study On Decision Making
When Raju was leaving an organization after 20 years, there is anxiety within him. He was leaving Swaraj to take up a
senior job at New Holland with a salary jump of almost double that of what he was getting at Swaraj. Change as if this is
making him feel uncomfortable. When he was given a farewell the Managing Director Dr. Rajesh gave a party to his
family at his residence and gave an open offer to return to Swaraj at any time for all the good service he has done for
the organization
As the days passed by, Raju noticed that at every stage of New Holland, each employee was committed to and driven by
the vision, mission and objectives of the organization - and the values. It was total commitment towards the values that
made Raju to feel different. Every communication, every note, every email and every decision was driven by what New
Holland stood for - its values. There is a feel of values in its communications with its employees and customers. The
information is shared and always available across all levels. The organization has no boundaries and hierarchies.
At all level there is no confidentiality or secret. The Vice President's presentation to South Asia Head is available on the
Intranet, he asked everybody to comment and wanted his or her opinion, and he personally signed it. At Swaraj, Sr.
Manager like Raju does not know even annual report. What is missing in Swaraj is the attitude of sharing. At Swaraj
everyone acts like a unified family they celebrate events like Diwali, but they were not united in goals towards
organization, one. So if some employee comes up with some idea he kept it for himself and used for his growth and
development. Information was never shared and his ideas may be passed on as his bosses' ideas and the employee is
likely to lose his position.

29. At Swaraj, everybody was encouraged to be a visionary, everybody can talk. Nevertheless, Raju realized that there were
few missionaries, few doers. In New Holland, there is one visionary and everyone else is missionary.
In Swaraj, people endlessly debate every concept. The essence of that philosophy was to encourage contributive
thinking and improvisation. But slowly it degenerated into a kind of questioning everything. It is being used as a tool to
get rid of pent-up emotions by trying to blame everything for lack of focus. At Swaraj, there was no attempt to be
transparent. If anything, everything was so couched in obscurities that it confused, rather than communicated. At New
Holland, Raju was facing a completely different style. The system was democratic. However, democracy did not lead to
mindless arguments or resistance. Neither was it repressive in enabling change. Raju have not seen people getting
anxious or vicious which is common in his last organization.
Swaraj is a successful firm. Its share prices are going up and even in worst days, it never saw any downturn. The chief is
respected in various industry associations. What makes Swaraj successful in business, even with all the disorders that
are given? It has a HR system, excellent training program, it is a company on the ball, energetic, performance driven,
hardworking, high on ethics and business practices (to outside world).
At New Holland, Take something like error management. If there is a breakdown of a process, a manger is expected to
walk through the sequence of events with the operating subordinate and see where the breakdown occurred.

30. Due to recession in Indian market and competition from Korean Majors made New Holland to rethink its strategy. Its
profitability started coming down. It posted loss for second consecutive year. New Holland appointed a consultant to look
into its operations. One of the major suggestions of the consultant is to downsize the organization by 30% every year for
next two years. Many of the employees who are performing well has to be given pink slip with two months’ salary as
economy is down and HQ is unable to support wage bill. Raju has been identified by organization to put the plan into
action. Raju started wondering what happened to the words "Value driven, Corporate Ethic etc. He challenged the
consultant and one of his senior managers regarding the solution given. They said it is the method followed by
organization in all its operations globally. At Swaraj never this kind of solutions are put into practice. Even if there is no
profit it was shouting and passing bucks but not losing jobs and colleagues. Suddenly he started feeling lonely.
Raju took leave for three days and wanted to be at his native place for some time to feel good. At the airport, he happened
to meet Dr. Rajesh, his past employer. The IC flight was delayed for three hours and both Dr. Rajesh and Raju had time to
sit together and discuss. Raju told Dr. Rajesh about the value driven attitude of his company and how it helped to build
brands. Dr. Rajesh also was thinking in same terms after his training program at Harvard Business School. He asked Raju
suggestions to improve the processes in Swaraj. Raju's suggestions were well taken by him. During the conversation, Dr.
Rajesh requested Raju to come back and be a change agent in Swaraj. The advantage is Raju knows the strengths and
weaknesses of the organization and improves it to world standards. His experience in New Holland can be utilized. Dr.
Rajesh told him, Raju can use his MNC experience to improve an Indian organization and it is nothing wrong in leaving a
MNC to help an Indian organization

31. Questions
Question 1 - what is the central issue to be addressed in this case?
Question 2 - If you were to be Raju what decision you will take?

32. Conclusion
The decision making process is a
complicated one but can be made simple
with adequate knowledge about the
subject.
It helps in the process of making choices
among various alternatives.
If everyone in the organization understand
the process of decision making, they can
contribute to the thinking process and
collaborate to reach a balanced and better
solution.
Not only this, Rational decision helps the
organization to excel in every areas from
better utilization of resources to facilitate
innovations.

33. Thank You