Describe different types of managerial decisions and the steps and the techniques used for decision making. Discuss Individual Vs Group decision making.

Types of Managerial Decisions:

Personal and Organizational Decisions:

• This classification distinguishes decisions made for personal goals from those made for organisational goals.
• It recognizes that managers often have to navigate conflicts between personal and organisational objectives.

Basic and Routine Decisions:

• Basic decisions involve unique, long-term commitments or large investments that impact the organization significantly.
• Routine decisions are repetitive and have a smaller individual impact, but collectively play a vital role in the organization’s success.

Programmed and Non-programmed Decisions:

• Programmed decisions are routine and repetitive, often handled through established procedures.
• Non-programmed decisions are unique and require managers to use their judgement and available information.

Gresham’s Law of Planning:

• This principle highlights the tendency for routine decisions to take precedence over unique, thought-intensive decisions.
• It acknowledges that managers often prioritize clearing routine tasks before addressing more complex, non-programmed decisions.

Complexity and Certainty Dimensions:

• The passage introduces two problem-related dimensions: complexity and certainty.
• Based on these dimensions, four types of decision modes are identified: Mechanistic, Analytical, Judgmental, and Adaptive.

Types of Managerial Decisions:

Mechanistic Decisions:

• Routine and repetitive decisions handled with established procedures or habitual responses.
• Often involve a limited number of decision variables and known outcomes for each alternative.

Analytical Decisions:

• Involve problems with a large number of variables, where outcomes for each alternative can be computed.
• Solutions can be found using computational techniques provided by management science and operations research.

Judgemental Decisions:

• Involve problems with a limited number of variables, but outcomes of alternatives are unknown.
• Requires good judgement to increase the likelihood of desired outcomes.

Adaptive Decisions:

• Involve problems with a large number of variables, where outcomes are unpredictable.
• Complex and uncertain problems that often require contributions from individuals with diverse technical backgrounds.

INDIVIDUAL VERSUS GROUP DECISION MAKING

Individual Decision Making:

Advantages Individual Decision Making:

• Quick and efficient for routine decisions.
• Maintains confidentiality and reduces conflicts.

Disadvantages Individual Decision Making:

• Limited perspectives and ideas.
• Risk of biases or tunnel vision.

Group Decision Making:

Advantages of Group Decision Making:

• Accumulation of more knowledge and facts.
• Broader perspective, leading to consideration of more alternative solutions.
• Increased satisfaction and support from individuals participating in the decision.
• Serves an important communication and political function.

Disadvantages of Group Decision Making:

• Slower decision-making process compared to individual decision-making.
• Involves compromise, potentially resulting in suboptimal decisions.
• Possibility of domination by one individual or a small group.
• Over-reliance on group decision-making can hinder swift and decisive action.

Harrison’s Summary on Group Impact in Decision Making:

• Groups are typically superior in establishing objectives due to their collective knowledge.
• Individual efforts are crucial in identifying unique solutions, which can later be considered by the group.
• Group judgement often surpasses individual judgement in evaluating alternatives.
• Involving group members in choosing an alternative leads to greater acceptance of the final outcome.
• Individual responsibility tends to be superior in implementing decisions compared to group responsibility.

Risky Shift Phenomenon:

• Contrary to popular belief, groups tend to make riskier decisions than individuals.
• Possible reasons include persuasive risk-takers, increased confidence with familiarity, diffused responsibility, and a societal preference for risk-taking.

Groupthink:

• This phenomenon involves a mode of thinking in a group where seeking consensus overrides critical thinking.
• It can lead to limited consideration of alternatives, resistance to re-evaluation, and a lack of contingency planning.

Both risky shift and groupthink can have detrimental effects on the quality of decision-making, potentially leading to suboptimal outcomes.