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Decision Making

Essay by   •  January 1, 2012  •  Research Paper  •  3,791 Words (16 Pages)  •  1,940 Views

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1. Introduction

Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing a goal.

In today's tough and uncertain economy, a company needs strong managers to lead its staff toward accomplishing its goals. But managers are more than just leaders -- they're problem solvers, cheerleaders, and planners as well. And managers don't come in one-size-fits-all shapes or forms. Managers fulfill many roles and have many different responsibilities at each level of management within an organization.

One of the main roles of effective managers is Decision Making Role. These managers need to make critical and timely decision making in the conduct of their day to day activities. Though the frequency, risk and level of uncertainty involved may differ, every manager at all levels of the organizational hierarchy involves in decision making.

The role of a manager is to monitor and shape the internal and external environments and to anticipate changes and react quickly to them. Therefore, decision making becomes a very sensitive role of any manager since failing to make appropriate and timely decision may ultimately bring a disaster which can even put the survival of the organization in to question. It even becomes very crucial with the prevailing turmoil in the global economy, political stress of powerful nations, and high dynamism in the internal and external business environment.

In order for organizations of any kind adapt to the changing environments and survive being the leading, critical decisions should be made in every activity. Every managerial activity requires appropriate timely decisions. Decision to engage/disengage in a line of business, resource employment, selecting product designs, choosing production/ service technology and marketing strategy are some of the basic decisions managers face in most organizations.

2. Discussion

2.1 Management Overview

The internal and external environment in which the organization operates is equally important to the competency of the manager for the successful target achievement of decisions made. The internal factors may include current employees, management, and especially corporate culture, which define employee behavior. Managers philosophical or leadership style- A manager's philosophical or leadership style directly impacts employees since traditional managers give explicit instructions to employees, while progressive managers empower employees to make many of their own decisions.

Company policies and Formal structure of an organization are the other internal factor affecting decision making. Company policies are guidance to managers to direct who must make decisions about circumstances that occur frequently within their organization. Formal structure of an organization is a structure which determines how information flows within the organization, which departments are responsible for which activities, and where the decision-making power rests. Organizational culture or organization's personality, organizational climate and availability of Resources are the other points worth mentioning.

And external forces may be categorized as directly interactive and indirectly interactive. Directly interactive forces are those which have an immediate and firsthand impact upon the organization's activities and decision making. These may include owners, customers, suppliers, competitors, employees, and employee unions. Any organization or manager shall take in to consideration the interests and influences of these factors in making every single decision. Indirectly interactive forces are those ones which affect the organization indirectly. These include Socio-cultural, political and legal, technological, economic, and global influences.

Managers make problem-solving decisions under three different conditions: certainty, risk, and uncertainty. All managers make decisions under each condition, but risk and uncertainty are common to the more complex and unstructured problems faced by top managers.

Decisions are said to be made under the condition of "certainty" when the manager has perfect knowledge of all the information needed to make a decision. This condition is ideal for problem solving. The challenge is simply to study the alternatives and choose the best solution. When problems tend to arise on a regular basis, a manager may address them through standard or prepared responses called programmed decisions. These solutions are already available from past experiences and are appropriate for the problem at hand. Structured problems are familiar, straightforward, and clear with respect to the information needed to resolve them. A manager can often anticipate these problems and plan to prevent or solve them.

In a risk environment, the manager lacks complete information. A manager may understand the problem and the alternatives, but has no guarantee how each solution will work. When new and unfamiliar problems arise, non-programmed decisions are specifically tailored to the situations at hand. The information requirements for defining and resolving non-routine problems are typically high. Most problems faced by higher-level managers demand non-programmed decisions.

2.2 Managerial Functions

Decision making as a common element of all Management Functions

Management has been described as a social process involving responsibility for economical and effective planning & regulation of operation of an organizations (private or public) in the fulfillment of given purposes. It is a dynamic process consisting of various elements and activities. These functions are planning; organizing, staffing, directing and controlling. As we all know these activities are different from operative functions like marketing, finance, purchase etc. Rather these activities are common to each and every manger irrespective of his level or status.

However, as management personnel

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