Decision Making- a Primary Task of the Manager

2377 Words Sep 29th, 2010 10 Pages

As the term implies, decision making is the process of selection of a course of action from among alternatives. All decisions made in an environment of at least some uncertainty. However, the degree will vary from relative certainty to great uncertainty. There are certain risks involved in making decisions. In a situation involving certainty, people are reasonably sure about what will happen when they make a decision. The information is available and is considered to be reliable, and the cause and effect relationships are known. In a situation of uncertainty, on the other hand, people have only a meager database, they do not know whether or not the data are reliable, and they are very
…show more content…
cost effectiveness analysis–the process of selecting the best ratio of benefits and costs.

After having evaluated the alternatives the job is to select one of them. Here the managers can use three basic approaches: 1. Experience, 2. Experimentation, and 3. Research and analysis

Experience There seems to be no greater teacher than experience. But what is experience? It is not the number of years spent in a business. Many managers do not learn by their mistakes. If so what is the benefit of experience? Mostly managers either do not or fail to identify the cause for their failures. Another facet is the lessons of experience may be entirely inapplicable to the new problems.

Experimentation Experiments are one way of testing a method. It is probably the most expensive one. Besides, unlike in science, there is no guarantee of repetition of the results. But one should be encouraged to do experiments-to try the various alternatives and see which is best. In view of the high cost involved, I suggest it should be used only after considering other alternatives and its implications.

Research and Analysis When a major decision has to be taken, research and analysis is the most effective technique. One of the most comprehensive research and analysis approaches to decision making is operations research. We will discuss the same in detail at later.

Types of Managerial