Chapter 3
Chapter 3
Chapter 3
Decision Making
Decision Making: is defined as the process of selecting or choosing the best course of action
from numbers of alternatives based on the criteria. Because managers are continually
confronted with opportunities and problems, they must constantly analyze the effect of
different decisions on their organizations and select the alternative that will move the firm
toward its stated objectives.
Types of Decisions: Several authors believe that there are two types of decisions: programmed
& non-programmed decisions.
A. Programmed decisions: These decisions are "programmable" because of a specific
procedure can be worked out to resolve them based on experience in similar situations.
Once a standard procedure has been established, it can be used to treat all like
situations.
They usually involve an organization's every day operational and administrative
activities
They are primarily found at the middle and lower levels of management.
Data used in making a programmed decision usually are complete and well defined.
Participants know the details and agree on how to resolve the problem.
B. Non-programmed Decisions: are used to solve nonrecurring problems.
No well-established procedure exists for handling them, primarily because managers
do not have experience to draw upon.
In contrast to programmed decisions, available data are usually incomplete.
Non programmable decisions are commonly found at the middle and top levels of
management and often is related to an organization's policy-making activities such
as whether to add a product to the existing product line, to reorganize the company,
or to acquire another firm, are examples