Define decision making and discus the different types of decisions.
Decision making is the process whereby managers arrive at a course of action to solve a particular problem or take advantage of a given opportunity.
Decision making is about how managers choose the best possible solution – to a given solution – from all possible solutions.
TYPES OF DECISIONS
Different problems require different types of decisions. These range from routine or programmed decisions to those decisions of a specific or noncurrent (once-off) nature also called non-programmed decisions.
a) Programmed Decisions
These are made either in accordance with written or unwritten policies, procedures or rules that simplify decision making in recurring situations. Emphasis is on limiting activities. Examples include decisions on salary scales for new employees which rarely have to be made due to the existence of the other salary scale for the same position.
Programmed decisions are used for dealing with complex as well as uncomplicated problems. It is especially suitable for problems of a routine nature. Programmed decisions are prevalent at the operational level of management hierarchy.
b) Strategic Decisions
These are decisions made by top management although lower level managers may also be involved in various stages of decision making process.
The decisions concerns the long-term future of the organisation e.g. decisions on new product development.
c) Administrative Decisions
These are usually made by middle or junior managers and are concerned with how the organisation’s rules and policies may be applied to a particular set of circumstances e.g. decisions on a loan application and also who is supposed to be recruited or retrenched.
d) Operational Decisions
These are usually made by junior managers or supervisors. Such decisions are more concerned with reacting to things happening e.g. how to cover for an absent employee.
e) Non-programmed Decisions
On the other hand, non-programmed decisions deal with unusual or exceptional problems. These problems will not be covered by policies. Example include decisions on resource allocation, whether to close an existing – say, loss making – product line or not.
Non-programmed decisions are especially material at the strategic managerial level where information is largely external and decisions are based on assumptions.
