Process of Decision-making

Decision-making process involves the following steps:

1. Identify the problem:

Decisions are made to solve problems. As a first step to decision-making, therefore, managers identify the problem. Problem is any deviation from a set of expectations. Managers scan the internal and external environment to see if the transitional operations conform to environmtnental standards. It not, it signals a problem, If company’s sales target is 10,000 units per annum but actual sales are 7,000 units, managers sense problem in the company. The problem is identifies with the marketing department. Managers use their judgment, imagination and experience to identify the problem as wrong identification leads to wrong decision.

2. Diagnose the problem:

Managers find cause of the problem by collecting facts and information that have resulted in the problem. Diagnoses help to define the problem; its causes, dimension, degree of severity and origin so that remedial action can be taken. Managers get to the core of the problem and isolate the problem in a separate category of operations called the problem-solving area. In the above example, managers search fore reasons of low sales. It could be low quality, poor promotion, better product introduced by competitors etc. The exact reason is found and the problem is said to have been diagnosed.

3. Establish objectives:

Objective is the end result that managers achieve through the decision-making process. Establishing objectives means deciding to solve the problem. The resolution forms the objective of decision-making. If the reason for low sales is poor salesmanship, managers form objective of improving the skills of salesmen to promote sales.

4. Collect information:

In order to generate alternatives to solve the problem, managers collect information from the internal and external environment. Information provides inputs for generating solutions. Information can be quantitative or qualitative. It should be reliable, adequate and timely sot eat right action can be taken ate the right time.

5. Generate alternatives:

Alternatives mean developing two or more ways of solving the problem. Managers develop as many solutions as possible to choose the best, creative and most applicable alternative to solve the problem.

6. Evaluate alternatives:

All the alternatives are weighed against each other with respect to their strengths and weaknesses. They are useful if they help to achieve the objective. Alternatives are evaluated in terms of acceptable criteria to analyse their impact on the problem.

7. Select the alternative:

After evaluating the alternatives against accepted criteria, managers screen the non-feasible alternatives and select the most appropriate alternative to achieve the desired objective.

8. Implement the alternative:

The selected alternative should be accepted and implemented by the organizational members. Implementation must be planned. Those who will be affected by implementation should participate in the implementation process to make it effective and fruitful.

9. Monitor the implementation:

The implementation process should be monitored to known its acceptability amongst organizational members. The alternative should be regularly monitored, through progress reports, to see whether the objective for which it was selected is achieved or not. If not, managers should make corrections wherever necessary in the implementation process. It may even require restart of the entire decision-making process. It yes, such alternative formats the basis for future decision-making.

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