Decision Making Process
To determine the best option or course of action to meet one’s needs, an individual goes through a series of steps in the decision-making process. The process of determining a business initiative’s planned path, setting specific actions into motion, and analyzing the results of those actions is the goal of business planning. Choosing from available choices the most feasible course of action is a rational process known as decision-making. Management must be responsible for making an effective decision and implementing it in a way that will ensure the organization’s prosperity. What the manager decides to do today will determine how the organization will evolve in the future.
With the help of business intelligence and analytics software, it is ideal to base business decisions on objective facts. It is possible to take a strategy or initiative in multiple directions in any business situation. Managing successful business operations requires the implementation of an effective decision-making process because of the multitude of options to consider and the volume of decisions that must be made, especially in large organizations.
There are certain steps a decision maker needs to follow in the decision-making process. Making quality decisions requires following these steps in a systematic manner. Non-programmed decisions are generally made through a decision-making process. Management follows the policies that are already in force for taking programmed decisions. A manager must follow the 7 steps of the decision-making process to make a rational and effective decision.
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7 Steps of Decision Making Process
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Step 1: Identification of Business Problems
The first step in the decision making process is identify the main problems. There are a variety of reasons for problems in an organization. The process of identifying problems is considered to be half done when the problem has been identified. Diagnosing a problem is like diagnosing a disease, which helps in providing the patients with the right treatment. The problem becomes easily solvable when it is correctly understood.
It is important for the manager to maintain a regular eye on a person’s working environment, the symptoms of problems, and the root cause of any issues. A progress report from subordinates is required, as is comparing the actual performance. Furthermore, he should examine the factors affecting the daily routine. In addition, he must use his skill, knowledge, experience, and judgment to come to a conclusion. When you’re identifying the problem, ask yourself a few questions:
- What is the problem that needs to be solved?
- What is the goal you plan to achieve by implementing this decision?
- How will you measure success?
Step 2: Analysis of those Problems
Analyzing the identified problems follows the completion of the first step of the decision-making process. An individual must collect all facts, data, and information related to problems in order to make such a decision. The decision maker has an obligation to analyze the main causes and impacts of problems on both the short- and long-term performance of the organization. To find out the source of the problem, all related facts, data, and information must be collected and analyzed.
Step 3: Development of Alternatives
A problem may have various alternatives solutions. Identifying and analyzing these alternatives is the decision maker’s responsibility. To identify all the alternative solutions, a decision-maker needs to be creative and innovative. Identifying alternatives can be done using a variety of sources such as records and files of problems, opinions and views of experts, discussions and discussions with colleagues, creditors, and customers.
Alternatives that are more clearly defined allow for more brainstorming. It is crucial for a manager to find and develop those alternatives that are strategically relevant to the problem. Alternative solutions require discussion and creativity, which is why they require mental and creative work.
Step 4: Evaluation of Alternatives
Considering the decision-making process, every alternative has been evaluated and examined. The effort required and the expected results should be considered when studying alternatives. Consider the evidence in favor of or against each alternative once you have identified multiple alternatives. Take a good look at what companies have done in the past to achieve success in these areas and what makes your own organization successful. Consider the potential pitfalls of each alternative, and weigh them against the potential rewards. There are a few common ways your team can analyze and weigh the evidence of options:
- Pros and cons list
- SWOT analysis
- Decision matrix
Step 5: Selection of Best Alternative
The decision-making process concludes at this stage after evaluating the various alternatives. This is where the best alternative is chosen. A manager should consider both short- and long-term impacts of a given alternative on the organization. You should consider all of the information you have gathered and how each stakeholder may be affected. Not every single alternative is right; sometimes the best choice is a mixture of a few different ones. Making effective decisions requires thinking outside the box and resolving problems creatively, so don’t limit yourselves or your teams to clear-cut options.Following approaches are followed to select the best course of action;
- Experience
- Experimentation
- Research and Analysis
- Personal Value and Aspirations
To analyze and select the best solution, the decision-maker must consider the above approaches. In choosing an alternative, he/she must consider the organization’s feasibility, satisfactoriness, and financial soundness. In order to achieve organizational objectives, the best solution must be chosen for implementation.
Step 6: Take Action and Implement the Alternative
In this step, the decision-making process becomes operational. It is possible to evaluate alternatives using resources available, but implementing them is quite difficult. The effectiveness of a decision-maker is determined by the extent to which it is implemented.
Instructions must be provided to the operational authorities and communicated periodically by the decision-maker. For the successful implementation of the decision, he should use his communication skills and alternative options. Depending on the gravity of the responsibilities, he has to delegate authority to his subordinates. A course of action must be implemented in the best possible way in order to achieve the organization’s goals.
Step 7: Review your decision & its consequences
By reviewing your decision and its results, you will know its actual performance. It is necessary to periodically evaluate the performance of decision-making since it is a continuous process. Following up and reviewing actual outcomes are essential. A modification of the procedures and techniques may be needed if the implementation does not yield the desired results. Such a modification also facilitates the proper decision-making process.
Decision Making Process Quiz
What is the first step in the decision making process
Options
a) Identification of problem or opportunity
b) Identification of alternatives.
c) Evaluation of alternatives.
d) Selecting the best alternative.
e) Implementing the decision
Which family business decision-making process will be most affected by bounded rationality
Options
a) Collaborative.
b) Independent.
c) Autocratic.
d) Consensus.
Which decision-making style listed in the text most aligns with an autocratic process?
Options
a) Analytic Style.
b) Conceptual Style.
c) Directive Style.
d) Behavioral Style.
Which of the following is not a step in the decision-making process?
Options
a) Recognition of the problems
b) Seeking alternative solutions
c) Planning
d) Selecting one of the alternatives as the solution
Which of the following stages of the management decision-making process is improperly sequenced?
Options
a) Evaluate possible courses of action, make decision
b) Review the actual impact of the decision, determine possible courses of action
c) Assign responsibility for the decision, identify the problem
d) Make a decision, assign responsibility
Which of the following is the final step in the decision-making process?
Options
a) evaluate the outcome of the decision
b) analyze the process of allocating weights to the decision criteria
c) implement the chosen alternative
d) determine the criteria for the next decision
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- Organizational Behavior | All of the Basic Concepts
- Types of Decisions – Programmed and Non Programmed Decisions | Organizational Behavior
- Managerial Versus Entrepreneurial Decision making – Fundamentals of Entrepreneurship | Management Notes
MBA,BBA.
I am Smirti Bam, an enthusiastic edu blogger with a passion for sharing insights into the dynamic world of business and management through this website.
I hold a MBA degree from Presidential Business School, Kathmandu, and a BBA degree with a specialization in Finance from Apex College,
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