Managerial Decision Making

Decision making:Decision making is the essence or very important part of the manager's job.
Decision making is the process of identifying and selecting a course of action to solve a specific problem.
Decision is outcome which is a choice of two or more alternatives.

Decisions and decision making:
Decision: is a choice made from available alternatives.
Decision making: is the process of identifying problems and opportunities and then resolving them.

Types of decisions:
1- Programmed decisions: decision made in routine, respective, well structured situations by use of decision rules.
Rules, virtually automatic decision making that follows established rules or guidelines.
- Managers have made the same decisions many times before.
- There are rules and guidelines to follow based on experience with past decisions.
- Little ambiguity involved and threats.

2- Non-programmed decisions:
Are made in response to situations that are unique, poorly defined and largely unstructured.
Non routine decision making that occurs in response to unusual, unpredictable opportunities and threats.
There are no rules to follow since the decision is new.

Decision making conditions:
Certainty: all the information the decision makers need is fully available.

Risk: decision has clear-cut goals.
Good information is available.

Uncertainty: Information about alternatives and future events is incomplete.
Mangers may have to come up with creative approaches to alternatives.

Ambiguity:- By far the most difficult decision situation.
- Goal to be achieved or the problem to be solved is clear.
- Alternatives are difficult to define.
- Information about outcomes is unavailable.


Certainty:A decision making condition in which managers have accurate, measurable and reliable information about the outcome of various alternatives.

Risk:A decision has clear-cut goals and good information is available, but the future outcomes are subject to chances.

Uncertainty:Decision making condition in which managers face unpredictable external conditions or lack the information needed.
Uncertainty are clouds, information is not clear.

Managers as decision makers:
Managers decisions impact on organization success, in this section there are two major types of models of how mangers make decisions.

- Rational models: managers usually use rational process, make optimal decision and understand all the information needed for decisions when making them.

Non rational model:Non rational model of managerial decision making suggests that information-gathering and processing limitations make optimal decisions difficult for managers.