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Decision Making

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30 views22 pages

Decision Making

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IQFA mughal
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Improving Decision

Making
To succeed in business today, companies need information systems that can support
the diverse information and decision-making needs of their managers and business
professionals.
emphasizes that the type of information required by decision makers in a company
is directly related to the level of management decision making and the amount of
structure in the decision situations they face.
Strategic Management. Typically, a board of directors and an executive committee
of the CEO and top executives develop overall organizational goals, strategies,
policies, and objectives as part of a strategic planning process. They also monitor
the strategic performance of the organization and its overall direction in the
political, economic, and competitive business environment.
Tactical Management. Increasingly, business professionals in self-directed teams
as well as business unit managers develop short- and medium-range plans,
schedules, and budgets and specify the policies, procedures, and business objectives
for their subunits of the company. They also allocate resources and monitor the
performance of their organizational subunits, including departments, divisions,
process teams, project teams, and other workgroups.

Operational Management. The members of self-directed teams or operating


managers develop short-range plans such as weekly production schedules. They
direct the use of resources and the performance of tasks according to procedures and
within budgets and schedules they establish for the teams and other workgroups of
the organization
Information Quality
What characteristics of information products make them valuable and useful to you?
To answer this important question, we must first examine the characteristics or
attributes of information quality .
Information that is outdated, inaccurate, or hard to understand is not very
meaningful, useful, or valuable to you or other business professionals. People need
information of high quality, that is, information products whose characteristics,
attributes, or qualities make the information more valuable to them. It is useful to
think of information
1.Time Dimension
Timeliness: Information should be provided when it is needed.
Currency: Information should be up-to-date when it is provided.
Frequency: Information should be provided as often as needed.
Time Period: Information can be provided about past, present, and future
time periods.
2. Content Dimension
Accuracy: Information should be free from errors.
Relevance: Information should be related to the information needs of a
specific recipient for a specific situation.
Completeness: All the information that is needed should be provided.
Conciseness: Only the information that is needed should be provided.
Scope: Information can have a broad or narrow scope, or an internal
or external focus.
Performance: Information can reveal performance by measuring activities
accomplished, progress made, or resources accumulated.
Form Dimension
Clarity: Information should be provided in a form that is easy to
understand.
Detail: Information can be provided in detail or summary form.
Order: Information can be arranged in a predetermined sequence.
Presentation: Information can be presented in narrative, numeric, graphic,
or other forms.
Media: Information can be provided in the form of printed paper
documents, video displays, or other media.
Decision Structure
Structured decisions: Structured decisions are those that can be
programmed. These decisions can be taken objectively. They are
essentially repetitive, routine and involve a definite procedure for
handling them.
Structured decisions involve the situation in which procedure follow
when decision needed. Programmed decisions are in fact those that are
made in accordance with some policy, rule.
• Unstructured decisions: Unstructured decisions are those in which
the decision maker must provide judgment, evaluation and insights into the
problem definition. These decisions must be taken subjectively. Unstructured
decisions involve decision situations in which it is not possible to specify in
advance most of the decision procedures to follow. Most decisions related to long-
term strategy can be thought of as unstructured (e.g., “What product lines should
we develop over the next five years
A semi-structured decision is one in which most of the factors needed
for making the decision are known but human experience and other
outside factors may still impact the decision. A good example of a semi-
structured decision is the hiring process. Part of the decision is
structured (years of experience, education, etc.) and part of the decision
is based on human experience (for example: social skills, problem
solving skills etc.)
Decision Making Process
1. Establishing Objectives
Establishing objectives is among the crucial decision-making steps in
management. Without clear objectives, it can be difficult to make
effective decisions that will help the organization meet its goals.
Establishing objectives involves setting specific goals that need to be
achieved within a certain timeframe.
For example, if you are the CEO of an e-commerce start-up with your
business expanding, you would want to hire the right employees for
various roles. Firstly, you would have to establish your objectives
regarding which parts of your business you would need to hire new
people.
Identify the Problem
The next important step in the decision-making process in management is
identifying the problem that needs to be addressed. Once the problem has
been identified, the manager will gather information about possible
solutions. This may involve consulting with others, doing research, or
running simulations. After weighing the pros and cons of each option, the
manager will choose the course of action that they believe is most likely to
succeed.
For example, after establishing the objectives regarding which parts of your
business need new recruits, you would have to identify the course of action
with others to recruit the ideal employees for the various job roles.
Gather Appropriate Information
This process of gathering information is known as information
gathering. The different sources of information that managers can use
include surveys, interviews, focus groups, observation, and secondary
data sources such as articles and reports. After gathering this
information, managers must then analyze it to determine which option is
best.
For example, after identifying the course of action for the new recruits,
you, along with your team, have to gather proper information about the
various hiring trends and how to recruit the ideal talents.
Identify the Alternatives
One of the most important aspects of the decision-making process in
management is identifying the alternatives. Without knowing what your
options are, it can be difficult to make an informed decision. There are a
number of different ways to identify the alternatives, but some of the most
common methods include brainstorming, research, and consultation.
For example, after gathering the appropriate information on how to recruit
the ideal talents, identify what alternatives you can offer to attract talents.
Like, can you offer remote working or a hybrid working model?
Weigh the Evidence
When we define decision making in management One key step in this
process is known as 'weighing the evidence'. This simply means taking the
time to consider all of the available information before making a final
decision. This can include things like market research, financial data, and
even gut instinct. By taking the time to weigh the evidence, managers can
make better-informed decisions that are more likely to lead to success.
For example, after identifying what alternatives you can offer to attract new
recruits, consider all the options to understand which would be the most
profitable for your business. For this, you can take insights from market
research, financial data, and even gut instinct
Take Action
There are many approaches to decision making, but one of the most
popular is the "take action" approach. This approach involves taking
decisive action in response to a problem, without overthinking or
second-guessing yourself. While this approach can lead to quick results,
it also carries the risk of making impulsive decisions that may not be in
the best interest of the company.
For example, after choosing the most profitable ways to hire new
talents, take the course of action of searching and interviewing the
individuals.
Review the Decision
Finally, after a decision has been made, it is important to review the
results and make any necessary adjustments.
For example, after hiring the new recruits, review the whole process to
see where you can make some changes to make the process more
efficient.
Decision Support System(DSS)
Decision support systems are computer-based information systems that provide interactive
information support to managers and business professionals during the decision-making process.
Decision support systems use (1) analytical models, (2) specialized databases, (3) a decision maker’s
own insights and judgments, and (4) an interactive, computer-based modeling process to support
semi structured business decisions.
An example might help at this point. Sales managers typically rely on management information
systems to produce sales analysis reports. These reports contain sales performance figures by
product line, salesperson, sales region, and so on. A decision support system (DSS), however, would
also interactively show a sales manager the effects on sales performance of changes in a variety of
factors (e.g., promotion expense and salesperson compensation).
Therefore, DSS are designed to be ad quick-response systems that are initiated and controlled by
business decision makers.
A decision support system involves an interactive analytical modeling process. For
example, using a DSS software package for decision support may result in a series
of displays in response to alternative what-if changes entered by a manager.
What if Analysis
In what-if analysis , a user makes changes to variables, or relationships among
variables, and observes the resulting changes in the values of other variables. For
example, if you were using a spreadsheet, you might change a revenue amount (a
variable) or a tax rate formula (a relationship among variables) in a simple financial
spreadsheet model. Then you could command the spreadsheet program to
recalculate all affected variables
Online Analytical Processing
The competitive and dynamic nature of today’s global business environment is driving demands by
business managers and analysts for information systems that can provide fast answers to complex
business queries. The IS industry has responded to these demands with developments like analytical
databases, data marts, data warehouses, data mining techniques, and multidimensional database
structures and with specialized servers and Web-enabled software products that support online
analytical processing (OLAP) .

Online analytical processing enables managers and analysts to interactively examine and manipulate
large amounts of detailed and consolidated data from many perspectives. OLAP involves analyzing
complex relationships among thousands or even millions of data items stored in data marts, data
warehouses, and other multidimensional databases to discover patterns, trends, and exception
conditions.

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