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Lesson05ManagerialDecisionMaking - Lesson-05 MANAGERIAL...

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Lesson:-05 MANAGERIAL DECISION MAKING Types of Managerial Decisions Chapter overview: types of managerial decisions, steps in decision-making process Today, students, we are going to discuss a managerial function that encompasses all the other functions of management, that is, making decisions. ± A decision is a choice made from available alternatives. ± Decision-making is the process of identifying problems and opportunities and selecting a course of action to deal with a specific problem or take advantage of an opportunity. ± Managers often are referred to as decision makers ± Managerial decision-making differs from personal decision making in the systematic, specialized attention that managers give to decision-making. ± Decision-making is not easy. It must be done amid ever-changing factors, unclear information, and conflicting points of view. ± Good decision-making is a vital part of good management, because decisions determine how the organization solves its problems, allocates resources, and accomplishes its goals. ± Although many of their important decisions are strategic, managers also make decisions about every other aspect of an organization, including structure, control systems, responses to the environment, and human resources. ± Plans and strategies are arrived at through decision making; the better the decision making, the better the strategic planning. ± Managers scout for problems and opportunities, make decisions for solving or taking advantage of them, and monitor the consequences to see whether additional decisions are required. ± Decision-making deals with problems. A problem arises when an actual state of affairs differs from a desired state of affairs. Examples of problem situations are: ¾ A deviation from past experience. ¾ A deviation from a set plan. ¾ Other people’s problems or decisions. ¾ The performance of competitors. In many cases, a problem maybe an opportunity in disguise. It is not always clear whether a situation faced by a manager presents a problem or an opportunity.David B. Gleicher, a management consultant, defines a problem as something that endangers the organization’s ability to reach its objectives, and an opportunity as something that offers the chance to exceed objectives. ± According to Peter Drucker, opportunities rather than problems are the key to organizational and managerial success. Drucker observes that solving a problem merely restores normality, whereas the exploitation of opportunities leads to progress. Types of Managerial Decisions
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± The first classification of personal and organizational decisions was suggested by Chester Barnard in his classic book: “The functions of the Executive”. In his opinion, the basic difference between the two decisions is that “personal decisions
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Lesson05ManagerialDecisionMaking - Lesson-05 MANAGERIAL...

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