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Unit 3: Planning and Decision-making

action. During this step, a thorough "what if" analysis should also be conducted to determine the Notes
various factors that could influence the outcome. It is important to generate a wide range of
options and creative solutions in order to be able to move on to the next step. Therefore,
managers should encourage people to develop different solutions for the same problem. The
ability to develop alternatives is as important as making a right decision among alternatives.
The development of alternatives is a creative, innovative activity. It calls for divergent thinking;
it calls for "systems thinking". In other words, managers should try to seek solutions outside the
present realm of their knowledge; they are forced to look into all the relevant factors before
coming up with a novel solution.
Fourth Step: Next, the manager selects the alternative that best meets the decision objective.
If the problem has been diagnosed correctly and sufficient alternatives have been identified, this
step is much easier. Peter Drucker has offered the following four criteria for making the right
choice among available alternatives:

1. The manager has to weigh the risks of each course of action against the expected gains.
2. The alternative that will give the greatest output for the least inputs in terms of material
and human resources is obviously the best one to be selected.

3. If the situation has great urgency, the best alternative is one that dramatizes the decision
and serves notice on the organisation that something important is happening. On the
other hand, if consistent effort is needed, a slow start that gathers momentum may be
preferable.

4. Physical, financial and human resources impose a limitation on the choice of selection. Of
these, the most important resources whose limitations have to be considered are the
human beings who will carry out the decision.

Final Step: Finally, the solution is implemented. The manager must seek feedback regarding
the effectiveness of the implanted solutions. Feedback allows managers to become aware of the
recent problems associated with the solution. It permits managers to monitor the effects of their
acts to gauge their success. They can evaluate their own decision-making abilities. Consistent
monitoring and periodic feedback is an essential part of the follow-up process.

Task Discuss an occasion where you had to make a decision on your own? Were you
happy with your decision-making process?

3.8 Styles of Decision-making

The success of any organisation depends on managers' abilities to make effective decisions. An
effective decision is a timely decision that meets a desired objective and is acceptable to those
individuals affected by it. The following Models of Decision-making are explained here below:

1. Rational Economic Model
2. Bounded Rationality Model or Satisficing Model
3. Optimizing Decision-Making Model
4. The Garbage Can Model

5. The Implicit Favourite Model
6. The Intuitive Model.

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