Explain Decision Making Process.
Decision Making Process: A good decision can only be prepared as a result of a rational decision making process. The different stages of the said process are as given below:
(i) Recognising and defining the problem
- Recognise and know the real problem and not the symptoms.
- Define the problem in order to find out the conditions for its solution.
(ii) Analysing the problem
- implies classifying this and finding the facts.
- Classification makes sure that a decision really contributes to the entire business rather than resolve an immediate or local problem at the expense of the complete.
- Facts are essential to make a sound decision and decrease risk.
- Must describe the unknown.
(iii) Determining the possible alternatives
- Usually problems have more than one alternative.
- Must consider all possible optional for arriving at a solution with competitors' solutions or those used in the past.
(iv) Evaluating the impact of Alternatives
- Decision maker should mentally put in effect each alternative and visualise their impact, therefore forecast what will happen when a certain forecast is adopted.
- Both qualitative and quantitative factors to be considered.
- Limitations of each alternative to be seems.
- Techniques as marginal analysis, cost effectiveness; cost-benefit analysis can be utilized.
(v) Selecting the finest solution
- Best solution is selected through comparing merits and demerits, gains and losses of each alternative.
- Must consider degree of risk, availability of resources, limitations and time needed for implementation.
(vi) Implementation
- Convert decision in action.
- Communicate, make sure subordinates' participation.
- Monitor implementation by feedback.