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Decision Making Process | The Steps In The Decision-Making Process

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Decision Making Process

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 1. Introduction

Decision making is one of the most important processes that are relevant in the business market today. It ensures that proper decisions are taken to eradicate problems and threats that the company is facing. But decision making in itself is a very complicated process when there is a lot on the line. It becomes increasingly difficult for managers in the modern dynamic market to take proper decisions as there is a lot of variance and factors that affect the market. The modern market is global in an excessively increasing competitive state where companies have to orient themselves according to the product as well as the market. Therefore, decisions taken have an immense impact on both the business as well as the employees working for the mentioned business. This translates into a lot of pressure on the managers of firms. Decision Making Models help in tackling this problem. They provide a step by step guide for the managers to break down their problems, analyze the various solutions and then implement the effective ones to tackle the problem. These models have helped decision makers take a rational approach towards problem solving without holding any individual liable.

This assignment shall look into the decision making process extensively and explore the various models and approaches that one may use to take proper decisions. It shall also broadly explain the key aspects of decision making in regards to real life experiments. This will show the various factors that influence the decisions taken by individuals under various circumstances. Lastly, it shall look into the decision making processes as a part of a group as how it influences the models of decision making.

2.1 The Decision Making Process

The decision making process involves proactive and reactive judgements from the decision making body. It is important for the individual to understand the various factors that will affect the business as well as the decision making processes related to the business (de Sousa et al, 2015). This is done through careful analysis. Identifying the problem is one of the most critical steps of the decision making process which enables the team to focus on the issues at hand. The market and business activities are diverse and dynamic and hence decisions taken may have an impact on the various departments even though they might not seem connected. Therefore understanding the problem is one of the most important steps. Once the problem is analyzed, proper steps may be taken to tackle the same. This is done through analysis of the available solutions. A problem may have a number of different solutions, each affecting the business in a certain way. Therefore, it is important that managers analyze each solution available to them to understand the various risks and impacts that they would have on the business. This helps in the elimination of harmful solutions which may have an underlying negative impact on the business. The next step is to implement the said solution in a streamlined manner so that existing activities of the business are not hampered or minimized. Managers should exhibit caution when it comes to implementing new policies in the business as employees may react negatively to radical change. Therefore companies should understand the various implications that certain decisions have on their workforce and actively try to minimize the harmful effects. The last stage of the decision making process is the review phase, where changes due to the new policies are monitored. The various effects and implications that the decision had on the business is monitored and required changes are made to the program to eliminate threats.

2.2 The Decision Making Models

There are many decision making models suggested over the years which help in the decision making process. All these models approach the decision making process through various combinations of processes but the general idea is the same. In this assignment, two models (Herbert A. Simon Model and the Henry Mintzberg Model) have been broadly discussed.

Decision Making process

Figure 1: The Various Decision Making Models

Herbert Simon’s 3 step model approach for the decision making process is widely regarded as the most common of all the models (Vuorinen, 2015). It is a very simple approach where there are mainly three steps, the intelligence phase, the design phase and the choice phase. The intelligence phase refers to the actual identification of the problem. This step is very important as it helps the decision maker to focus and streamline the whole process by eliminating unnecessary factors. This phase is concerned about the proper identification of the problem so that an effective decision may be taken. The design phase is concerned with the formulation of an effective strategy that will help the company to alleviate the problem. During this phase, decision makers brainstorm various ideas and strategies that may tackle the problem the company is facing. Various ideas and strategies are analyzed and their implications on the company are calculated. Decision makers are faced with tough choices as there may be multiple solutions to the same problem but it is important for the managers to choose the one which is most effective without having any negative impacts on the company. The last phase of Herbert Simon’s model is the choice phase. This phase is concerned with choosing the right alternative to the problem and then implementing the same to effectively tackle the problem. This is the actual decision making step where the decision maker takes a decision after carefully analyzing the problem and the various solutions available to the company (Campitelli & Gobet, 2010).
 
Decision Making process

Figure 2: Herbert Simon’s Model

Henry Mintzberg’s model is more detailed as it takes into account the dynamic nature of problems in a business environment. While Simon’s 3 step approach is a straightforward approach, Mintzberg’s model acknowledges the fact that problems change with time and that new and better solutions are available to decision makers with proper analysis of the same. It is therefore one of the most descriptive and most comprehensive models known to companies as of today (Vuorinen, 2015).

Decision Making process

Figure 3: Henry Mintzberg’s Model

This model too is divided into 3 stages. The first stage or the identification stage is concerned with the proper identification of the problem that requires diagnosis.  This step includes assessment of available sources and gathering new sources. The second step is the development process where alternatives are developed and analyzed. This can further be divided into 4 parts, i.e. assessing organizational and/or personnel knowledge; passive “waiting”; employing “agents” for search, and active searching (Ahmed et al, 2014). The final stage is the evaluation stage where solutions are screened and evaluated and an effective solution is validated through proper authorization. This evaluation stage also has 3 different methods, namely, judgement evaluation; analysis evaluation and bargaining evaluation (Ahmed et al, 2014).

2.3 The Decision Making Approaches

Various companies approach the decision making process via various methods. The overlying and underlying conditions of the business affects the approach that one may take. Therefore, various factors are always present in a business that will influence the approach one would take to tackle that problem. The three broad approaches to decision making is the rational approach, the bounded rational approach and the intuition driven approach. Rationality, whether it is economic and value based or activity and profit based plays a very important role when it comes to taking decisions. It is the basis on which companies make their choices. These decisions are further influenced by:

Social Pressure

Rough Rule of thumb, and

Unconscious bias.

These external factors must be taken into account and a specific goal should be set so that a streamlined approach may be taken towards decision making. The experiments of Solomon Asch and Stanley Milgram goes a long way in shedding light on the various social and biased factors that adversely affect the decision making process of any individual. These experiments set up artificial environments where test subjects were asked to take radical decisions and their obedience levels and social influence levels were measured. These helped experimenters to understand the extent to which individuals will be influenced by social factors while taking potentially life altering decisions. Bias is another factor that must be taken into account as humans are inherently biased as social creatures. These biases can become a threat to the decision making process as these studies are susceptible to incorrect data and analysis. Economic factors too play an important role as businesses are mostly profit based and certain decisions may have an immense economic benefit while cutting down on the quality of the job environment. These decisions tend to have a negative impact on the overall administration of the business over a long time and hence care should be taken to properly orient the decisions according to company standards.

3.1 Solomon Asch Experiment

Solomon Asch had devised a classic experiment, in social psychological behaviour, wherein it was observed that the decision of the majority has a strong impact on decision making of an individual. It is an experiment, which clearly exhibits how social opinions have impact of decision-making parameters. The Asch’s experiment clearly demonstrates how much peer-pressures and conformity has an impact on decision-making patterns of an individual. The obedience and compliance aspect that is witness in Solomon Asch’s experiment is known as Asch’s effect, which is the influence of a group’s decision- making on a individual’s judgement. This is seen classically in behaviour of individuals in a crowd. The individual on seeing an apparent danger like smoke in a crowd may not respond to it with alacrity until and unless he sees that, the majority in the crowd are alarmed. As in the experiment, the participant goes beyond his good judgement of senses and chooses the wrong line, because he feels safer in numbers.  The participant agrees with the majority inorder to feel the safety that groups provide. The social influence is heavy in one’s decision-making criteria. This experiment exhibits both normative as well as informational social influence. In decision-making both normative and informational social influence have tremendous impact, and perspective are formed unconsciously (Toelch, & Dolan, 2015).Hence this approach is highly applicable in organizational scenario as well.  Employees often tend to take any radical decisions even for the benefit of their organization, as they feel safer in numbers.

3.2 Stanley Milgrim Experiment

This experiment sheds light on the impact of the concept of obedience, and its influence on the human mind. Authoritarian leaders have a tendency to function by subjecting all to, some obedience parameters. People make decisions based on obedient guidelines and often perform tasks that are in conflict with his personal conscience. Obedience is a psychological influence where people make choices in life based on being obedient to higher authority. Most people, are conformists, hence they are influenced by any orders that are received from the higher ups. The concept of Milgrim’s experiment brought to light that obedience and following orders are an integral part of the decision making process.  Social conformity is a trait present in humans, and it provides means of stability and helps to avoid the responsibility attached to individual judgement (Chu, 2017). The organizational behavioural approach of a military academy or a military unit functions because of this concept of obedience. This in the organizational level gives direction and reduces chaos, but if the authority’s vision is mediocre then the firm also tend to become mediocre due to this decision making pattern. Stanley Milgrim’s theory also emphasizes on teaching norms  which are derived from authority and the social influence of these teachings are such that they are never challenged by the decision –makers and the process of compliance goes round and round.

 

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