PROBLEM IDENTIFICATION AND ANALYSIS DEFFERENT TYPES OF
TECHNIQUES AND EFFECTIVELY SOLVING PROBLEMS.
Decision is the selection from among several alternative courses
of action. The definition of decision involves following
Decision making is a process of selection and the aim is to
select best alternative.
2. Decision is aimed at achieving the objectives of the
organization if it is made in organizational context.
It also involves the evaluation of available alternatives
because only through this evaluation one can know the best
Decision making is a mental process because the final selection
is made after thoughtful consideration.
Decision involves rationality because through decision one tries
to better ones happiness.
6. Decision making involves a certain commitment. This
commitment may be for short run or long run depending upon the type
Steps in systematic decision making.Recognize and define the
problem or opportunity.Identify and analyze alternative courses of
action, and estimate their effects on the problem or
opportunity.Choose a preferred course of action.Implement the
preferred course of action.Evaluate the results and follow up as
Decision environments include:Certain environments.Risk
1. Certain environments exist when information is sufficient to
predict the results of each alternative in advance of
implementation.Certainty is the ideal problem solving and decision
Risk environments exist when decision makers lack complete
certainty regarding the outcomes of various courses of action, but
they can assign probabilities of occurrence.Probabilities can be
assigned through objective statistical procedures or personal
3. Uncertain environments exist when managers have so little
information that they cannot even assign probabilities to various
alternatives and possible outcomes.ncertainty forces decision
makers to rely on individual and group creativity to succeed in
problem solving. Uncertain environments also characterized by
rapidly changing:External conditions.Information technology
requirements.Personnel influencing problem and choice
definitions.These rapid changes are also called organized
There are various ways of classifying decision in an
organization. These bases give five sets of decisions.
Organizational Decision: In an organization when an individual
takes decisions as an executive for the organization, these are
known as organizational decisions. Personal Decision:
An executive can take decisions about himself which are personal
decisions. These decisions normally affect personal life of the
decision-maker, though at many items they may affect organization
also, such as, leaving of the organization by an individual.
Routine Decision Routine decisions are taken in the context of
day-to-day operation of the organization. Mostly, they are of
repetitive nature and related with the general functioning. They do
not require much analysis and evaluation and can be made quickly.
Strategic decisions are those which are taken during the current
time period, but whose primary effect is felt during some future
period. Strategic decisions affect organizational structure,
objective, facilities, and finances. These decisions are mostly
non-repetitive in nature. Since they have fundamental effects on
the organization, they are taken after careful analysis and
evaluation of various alternatives. These decisions are taken
comparatively at higher level of management.
Policy Decisions Policy decisions are taken by top management in
the organization which determines the basic policies. The policy
decisions are very important and have long-term impact. These
decisions provide help in establishing the business such as
deciding location of plant, volume of production, sale and purchase
decisions, policy decisions regarding the employees, etc. Policy
decisions are sometimes published as policy manual which become the
basis for other operative decisions. Operative Decisions
Operative decisions are related with the day-to-day operation of
the business. Middle and lower level managers who are more closely
related with the supervision of actual operations take these
generally. These decisions may be written or otherwise.
4. Programmed or Non-Programmed Decisions: Such classification
of decisions is made on the basis of the use of operations
research. Programmed decisions are normally of repetitive nature
and are taken within the broad policy structure. These generally
have short-run impact and are taken by lower level managers, such
as, granting leave to an employee, purchase of materials in normal
Individual and Group Decisions. This classification is based on
the basis of persons involved in the decision-making process. i)
Individual decisions are taken by a single individual. These are
taken in the context of routine or programmed decisions where the
analysis of various variables is simple and for which broad
policies are already provided. Sometimes, important decisions are
taken by single individuals also.
ii) Group decisions are taken by a group constituted for this
specific purpose or by a standing committee. These decisions are
generally very important for the organization. Group decisions have
certain positive value such as greater participation of individuals
and quality in decisions, and certain negative values such as delay
in decision-making process and difficulty in fixing the
responsibility of decisions.
Arriving at a decision implies that a manager has gone though a
series of systematically related steps. These steps of the decision
making process include (1) determining the problem as related in
objectives being sought; (2) identifying alternative solutions; (3)
analyzing the possible outcomes of each alternative; and (4)
selection of an alternative for subsequent implementation.
Pictorially, this process is shown below.
* Different alternatives will lead to different possible
outcomes orConsequences. This can be expressed symbolically as
Y1A1; thus, the outcomeY1 if alternative A1 is followsDetermining
the precise problem to be solved is the first and possibly most
important step in the decisional process. Every decision is
directly related to a problem. Time and effort should be expanded
only in gathering data and information. One-way of zeroing in on
the correct problem is to ask.
To be most meaningful only viable and realistic alternative
should be included in the listing. There are also time and cost
constraints that will restrict the number of reasonable
alternatives to be selected. Psychological barriers may also
restrict the number of alternatives that will be developed by a
Good managers are innovators who depend heavily on an ability to
think creatively. All present and potential managers should involve
into the mental and procedural aspects of creativity. The
application of creative ideas to managerial operations is often
difficult. Three reasons seem to be responsible for this
The formal organization with its multiple levels of
administrative authority may act as a barrier.
The desire for security on the part of some managers may hinder
the approval and implementation of new ideas.
When it appear that an organization is operating successfully,
managers may not be willing to
One creative technique used in identifying alternative courses
of action is referred to as brainstorming. Basically, the approach
seeks to elicit ideas by pooling the efforts of several people who
either meet as a group, or work on a problem by themselves.
Managers can never be sure of the actual outcome of each
alternative, uncertainty always exists. Consequently, this step is
a real change requiring managers to call on present knowledge, past
experience, foresight, and scientific acumen.
The acute decision maker must recognize the strategic or
limiting factors creating a problem. Strategic factors refer to
those that are most important in determining the action to be taken
in solving a given problem. An organization of strategic factors is
also important in analyzing alternative course of action. In this
way, the probability of making a more rational selection from among
alternative courses of action is increased.
There is no decisional problem until two or more alternative
courses of action are available.
Only one course of action can be selected. However, any
combination of actions can be considered as a single action.
A course of action is selected to either solve or alleviate a
problem. In order to choose an action that will lead to a desirable
solution, the problem must be specified as clearly as possible.
4.A satisfactory decision implies that the decision makes
analyzed the alternatives and judged a particular action to have
the greatest probability of solving the problem in a desirable
manner.5.The problem of measuring desirability has not been solved,
particularly when there are several possible outcomes associated
with each alternative.6.In facing some managerial problems, the
monetary scale can be used to measure the values in a problem.
However, this scale is not completely satisfactory and should be
used with care.
Classical decision theory.Views the decision maker as acting in
a world of complete certainty.The classical decision maker:Faces a
clearly defined problem.Knows all possible action alternatives and
their consequences.Chooses the optimum alternative.Is often used as
a model of how managers should make decisions.Applicability of
Classical decision theory:May not fit well in a chaotic world.Can
be used toward the bottom of many firms, even most high-tech
firms.Behavioral decision theory.Accepts a world with bounded
rationality and views the decision maker as acting only in terms of
what he/she perceives about a given situation.Recognizes that human
beings operate with:Cognitive limitations.Bounded rationality.The
behavioral decision maker:Faces a problem that is not clearly
defined.Has limited knowledge of possible action alternatives and
their consequences.Chooses a satisfactory alternative.Applicability
of Behavioral decision theory:Fits with a chaotic world of
uncertain conditions and limited information.Encourages satisficing
The garbage can model.A model of decision making that views
problems, solutions, participants, and choice situations as mixed
together in the garbage can of the organization.In stable settings,
behavioral decision theory may be more appropriate.In dynamic
settings, the garbage model may be more appropriate.Implications of
the garbage can model.Choice making and implementation may be done
by different individuals.Because of interpretation, there is a risk
that the actual implementation does not exactly match the
choice.Many problems go unsolved.
Managers face complex choice processes.Decision making
information may not be available.Bounded rationality and cognitive
limitations affect the way people define problems, identify
alternatives, and choose preferred solutions.Most decision making
in organizations goes beyond step-by-step rational choice.Most
decision making in organizations falls somewhere between the highly
rational and the highly chaotic.Decisions must be made under risk
and uncertainty.Decisions must be made to solve nonroutine
problems.Decisions must must be made under time pressures and
information limitations.Decisions should be ethical.