1. Define Decision-making

  Decision making is a continuous and indispensable component of managing which

   includes defining problems, gathering information, generating alternatives and

   choosing a course of action.

The role of decision-making for managers

The role of a manager in decision making is to be to incorporate all the

managerial competencies in their decision making process. The manager must

have the ability to communicate decisions throughout the entire team. He must

be able to rely on his planning and administration competency to form a

management team that would choose and implement strategic action through

which the vision will be achieved.

Managers must demonstrate their teamwork and self management competency.

The role of a manager in decision making processes is also to factor in global

awareness and emotional intelligence competencies.

The role of decision-making for employees

The participation of employees in decision making processes allows each

employee the opportunity to voice their opinions and share their knowledge with

others. This also plays a role in increasing team work among team members.

2. Discuss the conditions of certainty, risk, and uncertainty under which decisions are made

Certainty

• A condition of certainty exists when the decision maker knows with reasonable certainty what the alternatives are.
• What conditions are associated with each alternative, and the outcomes of each alternative.
• The cause and effect relationships are known and the future is highly predictable.

Risk

• When a manager lacks perfect information or whenever an information asymmetry exists, risk arises. Under a state of risk, the decision maker has incomplete information about available alternatives but has a good idea of the probability of outcomes for each alternative.

Example: the credit policy of the banking industry is being applied more stringently than in the past. Previously banks issued home loans at high interest rates, but many transactions ended in bad debt.

Probability

• Percentage of times that a specific outcome would occur if an individual were to make a particular decision a large number of times.

Objective probability

• The likelihood that a specific outcome will occur, based on hard facts and numbers.

Subjective probability

A person’s perception of the likelihood of an event subjective probability differs from objective probability. In that the judgements vary among individuals depending on their intuition, previous experience with similar situations, expertise and personality traits. eg.( Preference for risk taking or Avoidance thereof )

3.DESCRIBING THE CHARACTERISTICS OF ROUTINE, ADAPTIVE AND INNOVATIVE       DECISIONS.

ROUTINE DECISIONS:

Routine decisions are standard choices  made in response to relatively well defined and common problems with alternative solutions. The ways in which various decisions are made into making various routine decisions is often covered by established rules or standard operating procedures.

Morning briefings in an organization is an example of a routine decision

ADAPTIVE DECISIONS:

Adaptive decisions are choices made in response to a combination of moderately unusual and fairly uncommon problems with alternative decisions. Adaptive solutions often involve modifying and improving upon post routine decisions and practices. Continous improvement involves streams of an adaptive organizational solutions made over time resulting in a large number of small, incremental achievements/ improvements year after year.

INNOVATIVE DECISIONS:

Innovative decisions are choices based on the discovery of identification and diagnosis of unusual and ambiguous problems or the development of unique or creative alternative solutions.  The solutions frequently involves small interrelated decisions made over a period of months or years.

4. Explain how goals affect decision-making

Goals are results to be attained and this indicates the direction in which decisions and directions should be aimed. Goals focus to serve individuals and organizational decisions and efforts. They provide a set of stated expectations that can be understood they also aid the planning process. When goals are set they give a clear direction of how to achieve. This becomes clear when having to make decisions.

An example would be with an insurance company. What they do is they usually set goals regarding to increasing their profits and their goals will determine the direction they have to take and decisions they have to make in achieving the goal set.

5. DECISION-MAKING ROLES

There are three different types of decision-making models, namely the Rational model, the Bounded rationality model and the Political model.

Rational model

The rational model consists of various steps which help people to increase the likelihood of their decisions being logical. There are 7 steps in this specific model which makes it a whole.

STEP 1: Defining and diagnose the problem (There 3 skills namely Noticing, Interpreting, Incorporating)

STEP 2: Set goals. (Goals are set to eliminate a specific problem for example, with having an increase in the number of people getting injured at work a manager can plan to establish a program that warns people about the dangers of working without a safety gear and have everyone in the organization get involved in order to decrease the number of injuries at work)

STEP 3: Search for alternative solutions. (Getting more experts involved and do more research for example seek help from other organizations who might have had the same problem and managed to tackle the problem.)

STEP 4: Compare and evaluate alternative solutions. (After coming up with possible solutions, they need to be compared according to which would be the most effective.)

STEP 5: Choose from among alternative solutions. (Thereafter, the best solution which would be appropriate and would display effectiveness is the chosen.)

STEP 6: Implement the solution selected. (The solution is then acted on or rather carried out)

STEP  7:  Follow-up and control. (The effectiveness of the solution implemented is then checked, if the solution wasn’t effective another solution should be considered)

Bounded rationality model

This model was created by Herbert Simon in the mid-1950s,it basically explains why individuals make different decisions even though they have the same information. It has 4 tendencies which are:

1.Satisficing (The practice of selecting an acceptable goal or alternative solution)

2.Limited search (Making limited search on goals or other solutions to a problem)

3.Inadequate or misinterpreted information (Individuals do not have adequate information about the problems at hand and go about it the wrong way in solving it ,for  example if a specific hair product has increased their selling price a hairstylist would opt for a cheaper one which could badly affect his or her customers because of the quality of this cheap product.)

4.Information-processing biases (Consists of 5 biases namely: The availability bias, selective perception bias, concrete information bias, law of small numbers bias and gambler’s fallacy bias)

Political model

 The political model basically explains the decision-making process in the context of specific goals and interest of both powerful internal and external stakeholders.

Problem definition-When a specific problem blows up a single person might be finger pointed and would be expected to take the fall, this is called scapegoating. Most leaders in power use this to keep their names out of the mud for example, in the case of there not being proper sanitation in a particular place, the person who was awarded with the tender and didn’t carry out his responsibility could blame the minister of health for it)

Divergence in goals-A divergence in goals is defined as a conflict between two main goals and there wouldn’t be a clear winner in most cases.

Divergence in solution-The same as divergence in goals, divergence in solutions is basically a clash in finding the appropriate solution because workers might have different opinions on how to tackle a particular thing .One strategy which is often used is Co-optation which involves bringing new stakeholder representatives into the decision making process.