Decision-Making Process

Decision-Making Process

• The decision-making process consists of 8 steps: identifying a problem, identifying decision criteria, allocating weights to the criteria, developing alternatives, evaluating alternatives, choosing the best alternative, implementing the decision, and evaluating the decision's effectiveness.

Problem Identification

• A problem is an obstacle that makes it difficult to achieve a desired goal or purpose.
• Every decision starts with a problem, which is a discrepancy between an existing and a desired condition.

Identifying Decision Criteria

• Decision criteria are important factors that help resolve a problem.
• Criteria are determined by one's objectives.

Allocating Weights to the Criteria

• Criteria are not equally important, so weights are assigned to prioritize them in the decision-making process.

Developing Alternatives

• The decision-maker lists viable alternatives that could resolve the problem.
• This step requires creativity, and alternatives are only listed, not evaluated.

Evaluating Alternatives

• Alternatives are evaluated based on the identified criteria.
• The decision-maker calculates the score for each alternative by multiplying the rank with the assigned weight for the given criteria.

Choosing the Best Alternative

• The best alternative is chosen based on the highest total score calculated in the previous step.

Implementing the Decision

• The decision is put into action by conveying it to those affected and getting their commitment.
• The environment may need to be reassessed for any changes, especially for long-term decisions.

Evaluating the Decision's Effectiveness

• The outcome of the decision is evaluated to see if the problem has been resolved.

Decision-Making Perspectives

• There are three perspectives on decision-making: Rationality, Bounded Rationality, and Intuition.
• Rationality involves making logical and consistent choices to maximize value.
• Bounded Rationality involves making decisions rationally, but with limited information processing ability.
• Intuition involves making decisions based on experience, feelings, and accumulated judgment.

Decision-Making Styles

• Managers may use their own particular style, "rules of thumb," or heuristics to simplify their decision-making.
• Heuristics can be used to complement rational analysis or make decisions quickly with limited information.