The process of decision making means getting advanced information about the facts. In other words, it means finding the best possible method by the decision-maker, for doing any particular work in a specific condition, so that the problems may be solved scientifically, systematically, and logically.
There are various steps involved in the process of decision making.
Decision making is a sequential process, having various important steps, which are to be gradually accomplished.
Process of Decision Making In Management
In short, the important steps or stages of the process of decision making are as follows:
1. Identification and Defining the Problems
Just as a physician, first of all, has to diagnosis the disease, before its treatment, the entrepreneurs also identify and analyses the problems to understand it, clearly.
Here, the managers make efforts to know the problem through its symptoms, as a doctor does with respect to the disease. It is, however, noteworthy that the symptoms by themselves should not be regarded as a disease or the problem.
The actual problem should be ascertained by well understanding the difference between the problem and the causes of the problem.
Thereafter, causes of the problem and effects thereof, both should be understood clearly.
For that, besides obtaining related data and information, the causes responsible for the problem should also be well understood.
Related: 12 Techniques of Decision Making (Step by Step).
2. Analysis of the Problem
Analysis of the problem means obtaining detailed information and facts regarding various aspects of the problem and analyzing their effects.
Detailed information and facts are collected in respect of the nature of the problem, effects of the problem, elements affecting it, possibilities of its recurrence, etc. and these are classified into controllable and uncontrollable problems.
Thereafter, conclusions drawn by the analysis and the seriousness and Mistakes of the problems are known.
These are three principles for the analysis of the problems. There are:
- The principle of the futurity of the decisions.
- The principal effect of decisions.
- The principle of qualitative thoughts.
In real life, decisions on several occasions are required to be taken on the basis of inadequate information.
In such conditions, the decision-maker should essentially know, which information is inadequate and what will be the extent of risks in respect of decisions taken without sufficient information.
Since the decision-maker has to take the decision, by referring to inadequate information only, he should have the competence to identify the errors and to improve his decisions quickly.
3. Search and Determination of Alternative Solution
After the analysis of the problem, the entrepreneur should try to search for various alternative solutions. But, it should be done with the utmost skill, expertise, and care.
Due to lack of alternatives the decision making becomes a mechanical type, if proper alternatives are not identified.
There is no objection in adopting such type of process for routine decisions, but important decisions may never be taken like that.
Even in every desperate situation, there are several alternatives.
We know that all alternatives may not be suitable for the solution of the problem. To avoid useful alternatives, the principle of Limited factors should be kept in mind.
For this purpose objective must be defined well which are to be fulfilled, by the solution of the problem, limitations of time, money and sources should also be predetermined.
Related: 15 Roles of Entrepreneur as Innovator (Explained).
4. Evaluation of Alternative Solution
At this stage, different alternatives evaluated by the entrepreneur.
He has to analyze a particular alternative in the following perspective:
- What will be its results?
- How much capital will be required for it and how much expenditure will be required for it?
- How much the workforce will be required for that?
- What are the government restrictions on it?
- What steps may be taken by its competitors?
- What resources will be required for it?
- How much time will be required for various alternatives?
- Which is that task from which maximum outcome may be derived with minimum expenditure?
Comparative study of possible alternatives, their expected outcomes and effects have to be evaluated.
But, in practice, the selection of the best alternative is always not possible.
Sometimes, two or more than two alternatives exhibit actual results.
In such conditions, selection it to be made on the basis of suitability.
This is also possible that anyone alternative may not provide the best result, in comparison to all of the results, or it may not appear to be completely sound. In such conditions, the selection of the two best alternatives jointly will be desirable.
5. Selection of the Solution
In this step of decision making, the manager deletes all the alternatives, excepting one which is the best, or may cut Sort the list of alternatives by adopting any one particular alternative.
But, for that the manager is required to take the following actions:
- Selection of the alternative having maximum advantages and least demerits, after giving thought to the advantages and demerits of each alternative.
- To what extent the alternative will remain effective?
- What is the volume of sources available with the institution?
- Marginal factors should be completely considered.
- The balance should be established between both desirable and expected alternatives.
If the manager desires to implement any particular alternative, but if the possibilities of its success are not much, then he should select the second-best alternative.
But, such selections should be based on experience, experiments, Research and Analysis, etc. Which of course, depends upon the situation.
6. Executing the Decision
This is the six-step of the decision-making process. Technically this is not a part of the decision making.
However, it is essential to include it in the decision making process for the effectiveness of the decisions.
The subordinates and other parties should be made aware of the effective enforcement of the decisions and their acceptance should be obtained for the decisions.
Their support and cooperation should also be sought for implementation of the decisions.
For the effectiveness of the decisions, this is also essential that these should be properly implemented in time.
Here, it should be remembered that by the implementation of the decisions, some problems may also arise, which may be resolved by revising the decisions.
That way, the decision-making process is a continuous process in respect of any single problem.
Related: 12 Main Reasons Why Planning is Important in the Organization.
7. Follow Up
In this last stage of decision making, the efficiency of the decision-maker may be well assessed.
If the decision requires reconsideration, it should be revised according to the requirements, without any hesitation.
8 Conclusion
The literary meaning of decision making it to decide or to arrive at a conclusion, or to shortcut, or the making of one’s own mind.
Thus, now you know what is the process of decision making in management?.
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