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IS-DSS - Module 1

The document outlines the concept of business processes, detailing their components, types, and importance in achieving organizational goals. It highlights the role of information systems in enhancing efficiency, decision-making, and customer experience, while also discussing various management support systems and their features. Additionally, it contrasts centralized and decentralized information systems, explaining their characteristics, merits, and challenges.

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0% found this document useful (0 votes)
12 views18 pages

IS-DSS - Module 1

The document outlines the concept of business processes, detailing their components, types, and importance in achieving organizational goals. It highlights the role of information systems in enhancing efficiency, decision-making, and customer experience, while also discussing various management support systems and their features. Additionally, it contrasts centralized and decentralized information systems, explaining their characteristics, merits, and challenges.

Uploaded by

Shan Selvin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Module 1

Business Process

A business process is a series of interconnected tasks or activities individuals or systems perform to


achieve a specific business goal or deliver a product/service to customers and create value for the
customer. It involves the flow of inputs, information, and activities within an organization to
produce an output that meets a specific goal. Businesses use different types of processes:
operational for day-to-day activities, managerial for coordination, and strategic for long-term
planning.

Components:

1. Inputs: Resources such as data, materials, and labor required to start the process.

2. Activities: The tasks and workflows performed.

3. Outputs: The final product, service, or result of the process.

Types of Business Processes:

 Operational Processes: Core activities such as manufacturing, sales, and customer


service.

 Support Processes: Enabling processes like HR, IT, and finance.

 Management Processes: Strategic planning, monitoring, and decision-making.

Importance of Business Processes

 Efficiency: Streamlines operations to reduce costs and save time.

 Consistency: Ensures uniformity in delivering products or services.

 Quality Improvement: Enhances output by standardizing workflows.

 Compliance: Helps adhere to regulations and industry standards.

 Scalability: Simplifies growth by having clear, replicable procedures.

Role of Information Systems in Business Processes

Information systems (IS) play a critical role in automating, optimizing, and supporting business
processes.
A. Enhancing Efficiency

 Automates repetitive tasks (e.g., payroll, inventory management).

 Reduces manual errors, increasing speed and accuracy.

B. Enabling Better Decision-Making

 Data Analysis: Provides real-time insights through data collection and analytics.

 Decision Support: Tools like dashboards and decision support systems (DSS) assist in
informed decision-making.

C. Integration Across Functions

 Breaks down silos by integrating functions like marketing, sales, and production using
systems like ERP (Enterprise Resource Planning).

 Ensures smooth communication and coordination across departments.

D. Improving Customer Experience

 CRM Systems: Manage customer interactions, track preferences, and resolve issues
promptly.

 Personalizes services and improves customer satisfaction.

E. Supporting Innovation

 Encourages innovation through tools that enable process redesign (e.g., Business Process
Reengineering - BPR).

 Facilitates digital transformation with advanced technologies like AI, IoT, and cloud
computing.

Examples of Information Systems in Business Processes

 ERP Systems: Integrates core processes like finance, HR, and supply chain (e.g., SAP,
Oracle).

 CRM Systems: Manages customer relationships (e.g., Salesforce, Zoho CRM).

 Supply Chain Management (SCM): Optimizes logistics and inventory (e.g., SAP SCM,
JDA).

 Business Intelligence (BI): Provides actionable insights (e.g., Tableau, Power BI).

Advantages of Information Systems


1. Cost Savings: Automating tasks reduces overhead.

2. Improved Collaboration: Shared systems enhance team communication.

3. Scalability: Easily adapts to organizational growth.

4. Agility: Enables quick response to market changes.

Challenges in Implementing Information Systems

 High implementation costs.

 Resistance to change by employees.

 Security and data privacy concerns.

 Dependence on system reliability and uptime.

Management Support System (MSS)

MSS are computer-based systems designed to help managers at all organizational levels make
informed decisions. They integrate data, models, and analytical tools to streamline decision-making
processes and improve efficiency. It provides managers with the tools and capabilities to gather,
analyze, and present information for effective planning and control. MSS encompasses
several subsystems tailored to different managerial levels, aiming to enhance the decision-
making process across the organization.

Advantages

 Provide timely, relevant, and accurate information.


 Assist in problem-solving, planning, and strategic decision-making.
 Bridge the gap between raw data and actionable insights.

Features of Management Support Systems

1. Data Integration: Consolidates information from multiple sources.

2. Interactive Interfaces: Allows users to explore and manipulate data.

3. Support for Various Decision Levels:

o Operational (routine tasks).

o Tactical (medium-term planning).


o Strategic (long-term goals).

4. Customization: Tailors reports and analysis to user needs.

5. Real-Time Access: Provides up-to-date information for dynamic environments.

Benefits of MSS

1. Improved Decision-Making: MSS provide timely, relevant, and accurate information,


reducing uncertainty and enabling evidence-based decisions.

2. Increased Efficiency: Automating routine tasks and streamlining processes save time and
resources.

3. Enhanced Strategic Planning: Systems like ESS and SIS help align organizational strategies
with market conditions and long-term goals.

4. Better Collaboration: Shared access to information improves communication and


coordination across departments.

5. Scalability: MSS can grow with the organization, adapting to changing needs and
complexities.

Types of Management Support System

1. A Transaction Processing System (TPS) is the foundation of management support systems,


focusing on automating routine, day-to-day transactions. Its primary purpose is to handle
structured tasks such as order processing, payroll management, and inventory updates. These
systems are critical for ensuring data accuracy, consistency, and efficiency, especially in high-
volume operations. These systems are characterized by their speed, reliability, and ability to
handle large volumes of transactions in real time or through batch processing. TPS also acts
as a data source for higher-level systems like MIS, providing the foundational data for
analysis and reporting.

Example

a. Retail point-of-sale (POS) systems for billing and inventory updates.


b. Banking systems for deposits, withdrawals, and fund transfers.
2. A Management Information System (MIS) is designed for middle management to provide
structured, summarized reports that support routine decision-making. MIS takes raw
transaction data from TPS and organizes it into meaningful formats like periodic reports,
dashboards, and charts. This system primarily focuses on internal data, helping managers
monitor performance and ensure operational efficiency. MIS is essential for tactical decision-
making, as it provides a clear picture of ongoing operations. It delivers pre-defined reports,
making it less flexible than systems like DSS, but highly effective for structured decision-
making tasks
Examples:
a. Sales reports summarizing monthly revenue.
b. Inventory status updates.

3. A Decision Support System (DSS) is an interactive and flexible system designed to


assist in non-routine, complex decision-making. Unlike MIS, which focuses on
structured reports, DSS allows managers to analyze data, explore “what-if” scenarios,
and predict potential outcomes using mathematical models and simulations. This
system is particularly valuable when managers face decisions with multiple variables
or uncertainties. The user-driven nature of DSS, combined with its ability to integrate
both internal and external data, makes it an indispensable tool for strategic and tactical
planning.
Examples:
a. Budget planning and forecasting tools.
b. Marketing campaign analysis systems.
4. An Executive Support System (ESS), also known as an Executive Information System
(EIS), is tailored for senior executives who require a high-level overview of organizational
performance. These systems provide summarized data and visual representations, such as
dashboards, that highlight key performance indicators (KPIs), critical success factors (CSFs),
and market trends. The system often integrates external data sources, such as economic
indicators or industry reports, to provide a broader context for decision-making. ESS is highly
user-friendly, allowing executives to access relevant information quickly and focus on
strategic, long-term goals. Its ability to combine internal and external data makes it
particularly useful for identifying opportunities, monitoring threats, and aligning
organizational strategies.

Examples:
a. Dashboards showing revenue trends, market share, and competitive positioning.
b. Systems monitoring global economic indicators.
5. A Strategic Information System (SIS) is designed to support and enhance an organization’s
competitive strategy. These systems focus on leveraging technology to create unique
advantages in the marketplace, such as operational efficiency, customer loyalty, or market
differentiation. SIS is often aligned with the organization’s long-term goals, enabling it to
respond effectively to market changes and opportunities. By integrating advanced
technologies like artificial intelligence (AI), machine learning, and IoT, SIS helps
organizations innovate and stay ahead of competitors. It is the most strategic type of MSS,
with a focus on external competition and market dynamics.
Examples:
a. Amazon’s recommendation system for personalized shopping.
b. Airline reservation systems optimizing flight routes and pricing.

Components of Information Systems

An Information System (IS) is a structured system that collects, processes, stores, and disseminates
information to support decision-making, coordination, control, analysis, and visualization in an
organization. An effective IS comprises various components that work together to deliver the desired
results. These components are essential for organizations to manage data, operations, and strategic
objectives efficiently.

The primary components of an Information System are:

1. Hardware

Hardware refers to the physical devices and equipment that are used to collect, process, store, and
display data. It is the tangible part of the information system. These devices perform tasks that include
input, processing, output, and storage of data. Hardware facilitates the actual operation of the
information system by enabling data entry, processing, and presentation of results

 Examples of Hardware:

o Input Devices: Keyboards, scanners, and microphones for entering data.

o Processing Units: Central Processing Unit (CPU), memory (RAM, cache).

o Output Devices: Monitors, printers, and projectors that display processed data.

o Storage Devices: Hard drives, SSDs, cloud storage for saving data.

o Network Devices: Routers, switches, and cables that enable communication between
systems.

2. Software

Software includes the programs, applications, and operating systems that control and manage the
hardware components of an information system. It can be broadly divided into two categories: System
Software and Application Software. Software provides the tools and instructions required for the
hardware to perform useful tasks like data processing, analysis, and visualization.

 System Software: This includes operating systems like Windows, Linux, and macOS, which
manage the hardware resources and provide an environment for application software to run.

 Application Software: These are programs designed to perform specific tasks, such as word
processing, spreadsheet management, accounting software, Customer Relationship
Management (CRM) systems, and more.

3. Data

Data is the raw, unprocessed facts and figures that are collected and stored in an information system.
It can be numerical, textual, audio, or video. Data, when processed, becomes information that helps in
decision-making. Data is the core element that feeds into the system, and when processed, it provides
actionable information for decision-making and organizational operations.

 Types of Data:

o Structured Data: Organized in rows and columns, such as in databases.

o Unstructured Data: Data that does not follow a specific format, like emails, social
media posts, or audio recordings.

o Semi-Structured Data: Data that is partially organized, such as XML files.

4. People

People are the most important component of an Information System. They include all users,
managers, IT professionals, and stakeholders who interact with the system. People are responsible for
using the information system, managing its functions, and making decisions based on the information
it provides. People manage the system, ensure its effective use, interpret data, and make decisions
based on the information generated.

 Types of People Involved:

o End Users: Those who use the system for day-to-day tasks (e.g., employees,
customers).

o IT Specialists: System administrators, developers, and analysts who design,


maintain, and support the system.

o Managers: Individuals who use the information provided by the system for decision-
making.
5. Processes

Processes refer to the series of activities or tasks that transform data into meaningful information.
These include the methods, procedures, and protocols used by people and systems to carry out
business functions, such as order processing, data analysis, and customer support. Processes define
how data is collected, processed, stored, and disseminated. Processes ensure that the data within the
system is handled correctly and that the right information is produced to support decision-making,
strategy, and operations.

 Examples of Business Processes:

o Sales Process: From order entry to inventory update and shipping.

o Financial Process: Data input from accounting to generate reports or analyze


expenses.

6. Network

Network refers to the communication systems that allow data to be transmitted between different
components of the Information System. This includes the Internet, intranet, local area networks
(LAN), and wide area networks (WAN). Networks enable the transfer of data between remote systems
and devices, allowing real-time access to information and connectivity among users. The network
enables the exchange of data and information between different devices, systems, and users, ensuring
smooth operation and accessibility of data from anywhere.

 Examples of Networks:

o LAN (Local Area Network): Connects computers within a small geographic area,
such as within an office.

o WAN (Wide Area Network): Connects computers across larger distances, such as
between branches of a company.

o Cloud Networks: Allow remote storage and access to data via the internet.

Interrelation of the Components

The components of an information system work together to achieve organizational goals. For
example:

 Data is collected through hardware like sensors or data entry devices, processed by software
(e.g., databases and analytical tools), and used by people to make decisions.

 Networks facilitate the communication of data between different parts of the system,
ensuring that users and systems are connected.
 Processes define how data is handled, ensuring that the system runs efficiently and meets
business needs.

Centralized vs. Decentralized Information Systems

Information Systems (IS) are crucial for the smooth operation and management of
organizations, providing the necessary tools to collect, process, store, and disseminate information.
The structure and management of an Information System can vary based on how data, decision-
making, and control are organized within an organization. Two primary models are Centralized and
Decentralized Information Systems, each with distinct characteristics, benefits, and challenges.

Centralized Information Systems

Definition: A Centralized Information System is one where the control, decision-making, and
management of information are concentrated at a single, central point, often in a central location or
server. In this model, all data processing, storage, and analysis occur in a central unit or location, and
data is distributed to users through centralized resources.

Characteristics:

 Centralized Control: One central authority manages and controls the system and data.

 Single Point of Management: All technical resources, including servers, databases, and
software, are located at a central point.

 Standardized Systems: The system’s operations, such as data management and software, are
standardized across the entire organization.

 Data Consolidation: Data from different departments or units is collected and stored
centrally, enabling easier access, consistency, and quality control.

Merits :

1. Consistency and Standardization: Data is standardized across the organization, ensuring


consistency and uniformity in reporting and decision-making.

2. Cost-Effective: Maintenance and management of infrastructure are simplified since resources


are concentrated in one place.

3. Simplified Security and Backup: Since all data is stored in one location, securing, backing
up, and protecting the data becomes easier.

4. Reduced Duplication: Data is stored centrally, minimizing the risk of duplication and data
discrepancies across departments.
Challenges:

1. Single Point of Failure: If the central system experiences a failure (e.g., server crashes,
cyberattacks), it could disrupt the entire organization’s operations.

2. Scalability Issues: As the organization grows, it may become challenging to manage a large
volume of data and users through a single centralized system.

3. Slow Response Time: Remote offices or units may experience latency when accessing data
due to the distance from the central server.

4. Limited Flexibility: Local departments may have less control or flexibility in customizing
systems to meet their unique needs.

Decentralized Information Systems

A Decentralized Information System is one where the control, data management, and decision-
making are distributed across different departments, branches, or units within an organization. In this
model, each department or unit may have its own system and manage its own data without relying on
a central unit.

Characteristics:

 Distributed Control: Different units or departments have the autonomy to manage their own
systems, data, and decision-making.

 Independent Systems: Each unit may operate its own database, server, and software, tailored
to its specific needs.

 Autonomy and Flexibility: Local units have the flexibility to implement systems that meet
their unique requirements.

 Data Fragmentation: Data may be siloed in different departments or units, which can lead to
challenges in integration.

Merits:

1. Flexibility and Autonomy: Each unit has the freedom to select systems and tools that best
meet its specific needs.

2. Faster Decision-Making: Local managers can make decisions quickly without needing
approval from a central authority.

3. Improved Responsiveness: Decentralized systems allow departments or branches to respond


rapidly to local market changes, customer needs, and issues.
4. Scalability: As the organization grows, new units or departments can implement their own
systems without needing to overhaul a central system.

Challenges:

1. Data Inconsistency: Since data is managed separately, there can be discrepancies,


inconsistencies, or duplication across departments.

2. Lack of Integration: Integration of data from different departments or units can be difficult,
leading to challenges in cross-departmental decision-making.

3. Higher Costs: Each unit may need to invest in its own IT infrastructure, leading to higher
overall costs for hardware, software, and maintenance.

4. Security Risks: Managing security across multiple systems can be complex, with greater risk
of security breaches or data mismanagement.

Key Differences Between Centralized and Decentralized Information Systems

Aspect Centralized Information System Decentralized Information System

Centralized control, with one central Distributed control, with departments or units
Control
authority managing their own systems

Data All data is stored and processed in a Data is stored and processed independently by
Management central location different units

Limited flexibility, with standardized Greater flexibility, as departments can choose


Flexibility
systems their own systems

Easier to manage security due to More complex to manage security across


Security
centralized systems multiple systems

Can be challenging to scale with Easier to scale as each unit can independently
Scalability
organizational growth manage its own system

Can experience slow response time Faster decision-making and responsiveness


Response Time
for remote units for local units

More cost-effective for small to Higher costs due to independent infrastructure


Cost
medium organizations across units

Data Data is consistent and standardized Data fragmentation can lead to


Aspect Centralized Information System Decentralized Information System

Consistency across the organization inconsistencies and duplication

Role of Information in the Decision-Making Process

Decision-making is a critical process in any organization, where managers and stakeholders choose
the best course of action from several alternatives to achieve desired objectives. Information plays a
central role in this process, acting as the foundation for making rational, informed, and effective
decisions. The availability, accuracy, and relevance of information significantly influence the quality
of decisions made.

Importance of Information in Decision-Making

 Reduces Uncertainty: Information helps reduce uncertainty by providing insights into the
current situation, enabling managers to anticipate potential risks and outcomes.

 Facilitates Evaluation: It aids in assessing different alternatives and their potential


consequences, allowing decision-makers to choose the most appropriate solution.

 Supports Forecasting: Reliable information helps predict future trends, enabling


organizations to prepare for challenges and capitalize on opportunities.

 Improves Accuracy: Decisions based on accurate and timely information are more likely to
succeed compared to those based on intuition or guesswork.

 Enhances Efficiency: With proper information, the decision-making process becomes faster
and more streamlined.

2. Types of Information Used in Decision-Making

 Strategic Information: Used for long-term planning and high-level decision-making (e.g.,
market trends, economic forecasts).

 Tactical Information: Focuses on medium-term goals and resource allocation (e.g., sales
reports, production schedules).

 Operational Information: Involves day-to-day decisions and activities (e.g., inventory


levels, customer feedback).

Stages of Decision-Making and Role of Information

1. Identifying the Problem or Opportunity:


 Helps detect and define the problem or opportunity through data analysis, customer feedback,
and performance metrics. The first step in decision-making is to clearly identify the issue that
needs to be resolved or the opportunity to be explored. This involves understanding the gap
between the current situation and the desired outcome. A well-defined problem ensures that
efforts are focused in the right direction.

2. Gathering Relevant Information:

 Provides the necessary facts and figures to understand the context and scope of the problem.
Once the problem is identified, the next step is to collect all necessary information related to
the issue. This data could come from internal sources like company records, financial reports,
or employee feedback, as well as external sources like market research, competitor analysis,
or industry trends. Accurate and comprehensive information provides the foundation for
making informed decisions.

3. Identifying Alternatives:

 Helps brainstorm and outline potential solutions or courses of action. After gathering
information, potential solutions or courses of action must be identified. This stage encourages
brainstorming and creativity to ensure that multiple options are explored. A broad range of
alternatives gives decision-makers the flexibility to choose the most suitable solution.

4. Evaluating Alternatives:

 Enables comparison of alternatives based on criteria such as cost, time, and potential
outcomes. Each alternative is then assessed based on factors such as feasibility, cost, risks,
and alignment with organizational goals. Decision-makers analyze the pros and cons of each
option to determine the one that offers the greatest value while minimizing risks. Tools like
cost-benefit analysis or SWOT analysis can be used to evaluate these alternatives
systematically.

5. Choosing the Best Alternative:

 Ensures that the chosen solution aligns with organizational goals and objectives. After
evaluating the options, the most viable alternative is selected. This step requires considering
both short-term and long-term impacts, as well as ensuring the decision aligns with the overall
objectives of the organization. The chosen solution should be practical and provide the best
possible outcome under the given circumstances.

6. Implementing the Decision:


 Guides the execution of the decision by providing detailed action plans and performance
benchmarks. Once a decision is made, it must be put into action. This involves creating a
plan, allocating resources, assigning responsibilities, and setting deadlines to ensure
successful implementation.

7. Monitoring and Feedback:

 Tracks the progress and success of the decision, highlighting any adjustments needed. The
final step is to track the effectiveness of the decision and evaluate its results. This involves
measuring performance against predefined goals and gathering feedback to determine
whether the decision achieved its intended objectives. If issues arise, adjustments can be made
to improve the outcome. Continuous monitoring also provides valuable insights for future
decision-making.

Characteristics of Information in Decision-Making

 Accuracy: The information must be correct and free from errors.

 Relevance: It should be directly related to the decision being made.

 Timeliness: Information must be available when needed.

 Completeness: All essential details must be included.

 Clarity: Information should be presented in a way that is easy to understand.

 Consistency: It must align with other data and support c

 oherent decision-making.

Role of Technology in Providing Information for Decision-Making

Modern organizations rely heavily on technology to gather, process, and present information for
decision-making. Examples include:

 Management Information Systems (MIS): Provide structured information for routine


decisions.

 Decision Support Systems (DSS): Offer analytical tools to evaluate alternatives and predict
outcomes.

 Enterprise Resource Planning (ERP): Integrates data across departments for cohesive
decision-making.

 Big Data and Analytics: Provide insights from large volumes of data to support strategic and
operational decisions.
 Artificial Intelligence (AI): Offers predictive models and recommendations for complex
decisions.

Challenges in Information for Decision-Making

1. Information Overload: Too much data can overwhelm decision-makers, making it difficult
to identify critical insights.

2. Data Quality Issues: Inaccurate or incomplete data can lead to poor decisions.

3. Biases in Interpretation: Decision-makers may misinterpret information due to personal


biases.

4. Lack of Timeliness: Delayed access to information can result in missed opportunities.

5. Security and Privacy Concerns: Sensitive information must be protected to prevent misuse.

Levels of Decision Making

Decision-making in organizations occurs at different levels, depending on the nature of the decisions
and the hierarchy within the organization. These levels are typically categorized as strategic, tactical,
and operational decision-making. Each level plays a vital role in ensuring the smooth functioning
and long-term success of an organization.

1. Strategic Decision-Making:

Strategic decisions are high-level decisions made by top management, such as CEOs, directors, or
senior executives. These decisions have a long-term impact and focus on the overall direction and
goals of the organization. They involve significant resource allocation and are made in conditions of
uncertainty. Strategic decisions are non-routine and require comprehensive analysis and
foresight.Strategic decisions are critical because they shape the future of the organization and
determine its competitive position in the market.

2. Tactical Decision-Making:

Tactical decisions are medium-term decisions made by middle management, such as department heads
or managers. These decisions focus on implementing the strategies formulated at the strategic level.
Tactical decisions aim to bridge the gap between strategic and operational levels by breaking down
long-term goals into actionable plans.Tactical decisions are semi-structured, meaning they require
both analytical and judgmental input. They ensure that resources are used effectively to achieve
strategic goals.

3. Operational Decision-Making:

Operational decisions are short-term, routine decisions made by lower-level managers or supervisors.
These decisions deal with the day-to-day activities of the organization and ensure that tasks are
completed efficiently. Operational decisions are usually structured and follow standard procedures or
rules.Operational decisions ensure that the organization runs smoothly on a daily basis and that
immediate problems are addressed effectively.

Types of Decision

Decision-making in organizations varies depending on the complexity, level of uncertainty, and the
availability of information. These decisions can generally be classified into three main types:
Structured, Semi-structured, and Non-structured decisions.

1. Structured Decisions

Structured decisions are routine, repetitive, and highly predictable. They are decisions that can be
easily defined and follow established procedures or rules. These decisions typically occur at the
operational level of an organization and are based on clear data and facts. Structured decisions require
minimal human judgment as they are guided by established rules, making them easy to automate and
manage with information systems.

Characteristics:

 Clear Procedures: The decision-making process is well-defined and follows standard


procedures.

 Data-Driven: Decisions are based on predefined data and quantifiable metrics, often using
automated systems.

 Repetitive: They occur frequently and are consistent over time.

 Low Complexity: The alternatives and outcomes are straightforward.

2. Semi-structured Decisions

Semi-structured decisions are those that involve some level of complexity and uncertainty, but they
also have clear guidelines or frameworks to follow. These decisions are made with the help of both
data and human judgment, as they often require a combination of known procedures and evaluation of
alternatives. Semi-structured decisions are commonly found at the tactical management level, where
managers must balance standard procedures with the need for evaluation and judgment.

Characteristics:

 Partly Defined Procedures: There is a general framework or set of rules to guide the
decision-making, but it may require some degree of human input for analysis.

 Moderate Complexity: These decisions often involve evaluating different alternatives, with
some uncertainty in the outcome.

 Combination of Data and Judgment: Data is used to inform decisions, but subjective
judgment plays a role.

3. Non-structured Decisions

Non-structured decisions are highly complex and unique, with no predefined procedures or clear
guidelines. These decisions often occur at the strategic level and involve a significant degree of
uncertainty. The decision-maker must rely on intuition, experience, and analysis of various factors to
arrive at a solution. Non-structured decisions often occur at the senior management or executive level,
where strategic decisions are made to guide the future of the organization.

Characteristics:

 Unclear Procedures: There are no established guidelines or procedures to follow.

 High Complexity: These decisions involve multiple variables, uncertain outcomes, and
sometimes unpredictable results.

 Relies on Judgment and Experience: These decisions require human expertise, intuition,
and creativity, as there may be no clear right or wrong answer.

 Long-Term Impact: Non-structured decisions typically have a significant long-term impact


on the organization.

Comparison of the Three Types of Decisions


Level of
Type of Decision Characteristics Decision- Examples
Making

Scheduling, payroll
Structured Routine, predictable, based on clear Operational
processing, inventory
Decisions rules and data. Level
management.

Partially defined procedures,


Semi-structured Marketing strategy, supplier
involving both data and human Tactical Level
Decisions selection, promotions.
judgment.

Complex, unique, no predefined Entering new markets,


Non-structured
guidelines, requires judgment and Strategic Level mergers, crisis
Decisions
creativity. management.

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