Members that participated in the activity:

Learning outcomes:

1. Define decision-making and explain the role of decision-making for managers and employees
2. Discuss the conditions of certainty, risk, and uncertainty under which decisions are made
3. Describe the characteristics of routine, adaptive, and innovative decisions
4. Explain how goals affect decision-making
5. Differentiate between the rational, bounded rationality, and political models of decision-making

1. Decision-making and explain the role of decision-making for managers and employees

1.1 Definition of decision-making

 Decision making is a process of making a choice between several options and committing to a feature of course of action.

1.2 Role of decision making

• Enables the business to achieve its objectives and goals.
• Employees are motivated.
• Proper utilization of resources.
• Selecting the best alternative.
• Allows employees to think creatively.
• It helps to allocate right task to the right employees.
• It improves team building skills of employees.
• Decision making encourages employee participation.

2. Conditions of certainty, risk, and uncertainty under which decisions are made

3. Characteristics of routine, adaptive, and innovative decisions

3.1 Routine Decision

Routine decision are choices made in response to the problems defined clearly and have alternative solutions. This type of decision is usually covered by following policies, procedures and regulations implemented and they are also made by computer systems.

3.2 Adaptive Decisions

Adaptive decisions are choices that are made to problems that are uncommon or unusual and have alternative solutions. This type of decision also includes the continuous improvement as a key element. It also involves improving past routines and adapting to the trends in the markets. Decisions regarding the continuous improvements are driven by goals such as providing better quality as well as improving efficiency.

3.3 Innovative decisions

Innovative decisions are choices based on discovering something new that nobody has discovered before and the development of unique, alternative creative ideas. Innovative decisions are usually based on incomplete and frequently changing information and are made before the problem has been clearly and fully defined.

3.4  How goals affect decision-making.

Goals affect decision-making both negatively and positively, they either add the pressure that keeps a business to its toes or give a business a bad image.

Some of the positive impacts of goals are as follows:

• They help a business keep up with its ision and objectives
• Goals helps keep a business image good
• Goals keep a business competitie
• Goals helps businesses measure their success

Below are the negative impacts of goals in decision-making:

• A business could lose its good image
• A business could lose a good deal
• A business could lose its market

5. Distinguish between the rational, bounded rationality, and political models of decision-making

5.1   Rational decision-making model

The model uses objective data, logic, and analysis instead of a subjective approach to solving a problem. It’s a step-by-step model that helps identify the problem and get the suitable solution to the problem.

Steps of rational decision model

Step 1: Define and diagnose the problem.

Step 2: Set goals.

Step 3: Alternative solutions.

Step 4: Compare and evaluate alternative solutions.

Step 5: choose from among solutions.

Step 6: implement the solution selected.

Step 7: follow-up and control.

5.2  Bounded rationality model

The bounded rationality model mostly highlights the limitations of rationality and the decision-making process that occurs daily.

The bounded rationality model refers to an individual’s tendencies to do the following:

• Satisficing - The process of selecting a suitable alternative solution.
• Limited search - Frequently during the search of alternative solutions and suitable goals, individuals do not go in depth, and this is because they encounter a source that seems suitable which discourages them to search further.
• Information-processing biases - It is most likely that while in search of solutions, individuals will fall into information biases.

5.3  Political Model

This model describes decision making process in a manner of stakeholders.

Power is the ability to influence individual, departmental, and organizational decisions and goals. Power has the following factors:

• The definition of the problem.
• Choice of the goal.
• Consideration of alternative solutions.
• Selection of the alternative to be implemented.
• Actions and success of the organization.

Factors that affect political model:

• Stakeholders.
• Choice of goal.
• Alternative solutions.