Decision Making

Dr.
Hansdeep Kaur
Dr.Hansdeep Kaur
Dr.Hansdeep Kaur
Dr.Hansdeep Kaur
4 Decision Making Styles
The four decision-making styles include:

Analytical
Directive
Conceptual
Behavioral
Dr.Hansdeep Kaur
1. Directive
The directive decision-making style uses quick, decisive
thinking to come to a solution. A directive decision-maker has a
low tolerance for unclear or ambiguous ideas. They're focused
on the task and will use their own knowledge and judgment to
come to a conclusion with selective input from other individuals.
Directive decision-makers excel at verbal communication.

They're rational and logical in their decision-making. When the
team or organization needs a fast decision, a directive-style
decision-maker can effectively make a choice. Their style is
valuable for making short-term decisions.
Dr.Hansdeep Kaur
2. Analytical
Analytical decision-makers carefully analyze data to
come up with a solution. They're careful and adaptable
thinkers. They will invest time to glean information to
form a conclusion. These decision-makers are task-
oriented but have a high tolerance for ambiguity.
Analytical decision-makers take time to compile data

and evidence before they come to a conclusion. When
they do make a decision, they have looked at all the
details and formed what they believe is the best possible
solution.
Dr.Hansdeep Kaur
3. Conceptual
Those who make decisions with a conceptual style are big picture
thinkers who are willing to take risks. They evaluate different options
and possibilities with a high tolerance to ambiguity. They're social-
oriented and take the time to consider big ideas and creative solutions.
Conceptual decision-makers look forward to what could happen if the

decision is made. Their conclusions come from visualizing different
opportunities and outcomes for the future. They're strong in making
long-term decisions.
Dr.Hansdeep Kaur
4. Behavioral
A behavioral style of decision-making focuses on relationships

more than the task. It evaluates the feelings of others as part of
their decision-making process. Behavior decision-makers have a
low tolerance for ambiguity and a social focus as they evaluate
solutions.
These decision-makers rely on information from others to guide

what they choose. They are persuasive communicators who
value decisions based on a team consensus. Their decisions are
often based on how the choice will impact relationships.
Dr.Hansdeep Kaur
Two spectrums work together to
create the decision-making style
framework. The first spectrum is
structure vs. ambiguity. This
spectrum measures people's
propensity to prefer either structure
(i.e., defined processes and
expectations) or ambiguity (i.e.,
open-ended and flexible).
Dr.Hansdeep Kaur
The second spectrum is task/technical vs. people/social.
This spectrum measures if the motivation to make a
specific choice is guided more by a desire to be right, or to
get results (task/technical), or if it's to create harmony or
social impact (people/social).
Dr.Hansdeep Kaur
Types of Decisions
1. Programmed and Non-Programmed Decisions
2. Major and minor decisions
3. Routine and Strategic Decisions
4. Policy and Operative Decisions
5. Organisational and personal decisions
6. Individual and group decisions
7. Crisis and Research Decisions
8. Problem and Opportunity Decisions
Dr.Hansdeep Kaur
Techniques/ Approaches of
Decision Making
1. Marginal Analysis
2. Financial analysis
3. Break even analysis
4. Ratio analysis
5. Operation research
6. Pareto analysis
7. Paired comparison analysis
8. Grid Analysis
9. Force field analysis
10.Brainstorming
11.Nominal group technique
Dr.Hansdeep Kaur
TECHINQUES OF DECISION MAKING
1. Marginal Analysis - This technique is used in
decision-making to figure out how much extra output
will result if one more variable (e.g. raw material,
machine, and worker) is added.
2. Financial Analysis - Financial analysis is a technique
of evaluating businesses, projects, budgets and other
finance-related entities to determine their
performance and suitability.
3. Break-Even Analysis -This tool enables a decision-
maker to evaluate the available alternatives based on
price, fixed cost and variable cost per unit.
Dr.Hansdeep Kaur
Dr.Hansdeep Kaur
4. Ratio Analysis - The purpose of conducting a
ratio analysis is to interpret financial statements to
determine the strengths and weaknesses of a firm,
as well as its historical performance and current
financial condition.
5. Operations Research Techniques - The decision-
maker makes use of scientific, logical or
mathematical means to achieve realistic solutions
to problems.
6. Pareto Analysis - Pareto Principle (also known as
the 80/20 rule) the idea that by doing 20% of the
work you can generate 80% of the benefit of doing
the entire job.
Dr.Hansdeep Kaur
7. Paired comparison analysis - A paired
comparison is usually a method in which a certain
employee, and his/ her job is compared with
another employee of a similar post, and his/ her job.
Usually, such paired comparisons are made on the
grounds of the overall performance of an individual.
8. Grid analysis - The technique works by getting
you to list your options as rows on a table, and the
factors you need consider as columns.
9. Force Field Analysis - Force Field Analysis helps
you to think about the pressures for and against a
decision or a change.
Dr.Hansdeep Kaur
The Pareto Principle states that 80 percent of a project's benefit
comes from 20 percent of the work. Or, conversely, that 80 percent
of problems can be traced back to 20 percent of causes. Pareto
Analysis identifies the problem areas or tasks that will have the
biggest payoff.
Dr.Hansdeep Kaur
10. Brainstorming - Brainstorming is a group
decision making technique designed to increase
the range of ideas and solutions available for the
group to explore. The goals is to generate as many
ideas as possible.
11. Nominal Group Technique – In this technique,
team members begin by writing down their ideas,
then selecting which idea they feel is best. Once
team members are ready, everyone presents their
favorite idea, and the suggestions are then
discussed and prioritized by the entire group.
Dr.Hansdeep Kaur
DECISION TREE
A decision tree is a decision support tool that uses a
tree-like graph or model of decisions and their possible
consequences, including chance event outcomes,
resource costs, and utility. It is one way to display an
algorithm that only contains conditional control
statements.
Dr.Hansdeep Kaur
Dr.Hansdeep Kaur
Decision Making Conditions
Dr.Hansdeep Kaur
1. Certainty
•Certainty is a condition under which the manager is well

informed about possible alternatives and their outcomes. There
is only one outcome for each choice. When the outcomes are
known and their consequences are certain, the problem of
decision is to compute the optimum outcome.
•The condition of certainty exists in case of routine decisions

such as allocation of resources for production, payment of wages
and salary etc. There is a little ambiguity and relatively low
chance of making and impractical decision.
Considering a simple example, every farmer has knowledge of the time periods for
growing crops. Therefore, they make definite decisions within the relevant time
frame. That is, they have prior knowledge of the decision they make.
Dr.Hansdeep Kaur
2. Risk
A state of risk exists when the manager is aware of all the
alternatives, but is unaware of their consequences. The decision
under risk usually involves clear and precise goals and good
information, but future outcomes of the alternatives are just not
known to a degree of certainty
A manager may understand the problem and the
alternatives, but has no guarantee how each
solution will work
Considering a simple example, a man lost his job and is
unable to pay his rent. Because of this, he makes the choice
to steal money from the local convenience store. In this
situation, the man gets a risk and he knows the outcome is
bad.
Dr.Hansdeep Kaur
3. Uncertainty
•A state of uncertainty occurs when managers are unaware of the

problem they face.
•When information is so poor that managers can't even assign
probabilities to the likely outcomes of alternatives, the manager
is making a decision in an uncertain environment.
•if we toss an unbiased coin
•If we concern this concept within a simple example when a

consumer buys goods, they know what they are getting and how
much utility they get from their consumption but for some
goods, it means games or lotteries outcome is uncertain. Horse
racing, buying insurance, playing gambles, outcome cannot be
measured certainly.
Dr.Hansdeep Kaur

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Dr.

The four decision-making styles include:

Directive decision-makers excel at verbal communication.

Analytical decision-makers take time to compile data

Conceptual decision-makers look forward to what could happen if the

A behavioral style of decision-making focuses on relationships

These decision-makers rely on information from others to guide

•Certainty is a condition under which the manager is well

•The condition of certainty exists in case of routine decisions

•A state of uncertainty occurs when managers are unaware of the

•If we concern this concept within a simple example when a

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