Explain Decision Making Process.

Decision Making Process: A good decision can only be prepared as a result of a rational decision making process. The different stages of the said process are as given below:

(i) Recognising and defining the problem

 - Recognise and know the real problem and not the symptoms.  

 - Define the problem in order to find out the conditions for its solution.

(ii) Analysing the problem

 - implies classifying this and finding the facts.

 - Classification makes sure that a decision really contributes to the entire business rather than resolve an immediate or local problem at the expense of the complete.

 - Facts are essential to make a sound decision and decrease risk.

 - Must describe the unknown.

(iii) Determining the possible alternatives

 - Usually problems have more than one alternative.

 - Must consider all possible optional for arriving at a solution with competitors' solutions or those used in the past.

(iv) Evaluating the impact of Alternatives

 - Decision maker should mentally put in effect each alternative and visualise their impact, therefore forecast what will happen when a certain forecast is adopted.

 - Both qualitative and quantitative factors to be considered.

 - Limitations of each alternative to be seems.

 - Techniques as marginal analysis, cost effectiveness; cost-benefit analysis can be utilized.

(v) Selecting the finest solution

 - Best solution is selected through comparing merits and demerits, gains and losses of each alternative.

 - Must consider degree of risk, availability of resources, limitations and time needed for implementation.

(vi) Implementation

 - Convert decision in action.

 - Communicate, make sure subordinates' participation.

 - Monitor implementation by feedback.