CHAPTER 7

PRINCIPLES OF
MANAGEMENT

“the art of getting things done through the efforts of
other people.”

MULTAZIMAH BINTI MAT DAUD

TABLE OF CONTENTS

1 Introduction to Management
2 Planning
3 Organizing
4 Leading
5 Controlling
6 Staffing
7 Decision Making

CHAPTER SEVEN

DECISION MAKING

DECISION MAKING CONCEPT

Definition of decision making

 Decision making is the process of identifying and selecting a

course of action to solve a specific problem.

 Decision making is a fundamental process in management.
 According to Huber(1980), the problem solving process involved a

set of activities undertaken to explore and implement corrective
action in certain situation.

 Process of identifying problems and finding alternative to solve

the problems

 The process of deciding about something important, especially in

a group of people or in an organization.

 “Decision-making involves the selection of a course of action

from among two or more possible alternatives in order to arrive
at a solution for a given problem”.

 Since decision making process follows the above sequential steps,

a lot of time is spent in this process. This is the case with every
decision taken to solve management and administrative
problems in a business setting. Though the whole process is time
consuming, the result of such process in a professional
organization is magnanimous.

DECISION MAKING CONCEPT

Types of decision making

STRUCTURED PROBLEMS AND PROGRAMMED DECISIONS
 Made based on pre-determined policies, rules and procedures.
 Every organization has guidelines that managers and other

employees can follow to make a decision on a routine basic.
 Programmed decisions enable a manager to make streamlined and

consistently effectives choice. Normally involve situations or matters
that repetitive or routine in nature.
 Sometimes prevent managers from making better decisions as some
situations may have exceptional circumstances not covered by the
organization’s policies, rules or procedures.

UNSTRUCTURED PROBLEMS AND NON-PROGRAMMED DECISIONS
 Involve situations that are new or exceptional for which there is no

proven answers to rely on as a guide.
 Usually made by top-line managers who would have the requisite

conceptual skills and experience.
 Examples of situations:
- Efficient allocation of limited resources.
- Deciding what needs to be done when a new product fails in
the market.
- How to increase the efficiency of the customer service
department.
 The ability becomes increasingly important as a manager move up

the organizational hierarchy.

DECISION MAKING CONCEPT

Types of decision making

FEATURES PROGRAMMED NON-PROGRAMMED
DECISIONS DECISIONS

Types of problem Structed Unstructured
Managerial level Lower
Frequency Repetitive, routine Upper
Information Readily available
New, infrequent

Ambiguous or
incomplete

Goals Clear, specific Unclear

Time frame for solution Short Relatively long

Decision is made based Procuderes, rules, Judgement and
on policies, guidelines creativity

CONDITION OF DECISION
MAKING

Certainty

 In condition under certainty, managers will be
able to predict what will happen in the future.

 Managers have real information that is
accurate and reliable.

 They also have an adequate and complete
knowledge about the matter.

 In this condition, assuming that all the
information obtained is complete & reliable,
managers should be able to know the actions
that must be taken & the outcomes of the
action accurately.

CONDITION OF DECISION
MAKING

Risky

 Refer to conditions whereby decision makers
would only be able to roughly predict the
outcome of implementing the alternative due
to limited knowledge & information.

 It can be determined through objective
probability; mathematical used, subjective
probability; manager’s experiences &
judgment.

 Managers also can refer to old data to make
accurate predictions

CONDITION OF DECISION
MAKING

Uncertainty

 Refer to conditions whereby decision makers
are unsure or unable to predict the outcomes
of an action.

 In this condition, managers do not have any
information on the outcome of implementing
an alternative.

 Therefore, they must be able to think critically,
make their own judgment based on past
experiences.

DECISION MAKING PROCESS

IDENTIFY THE PROBLEM
FORM ALTERNATIVES

ANALYZE THE ALTERNATIVES
SELECT THE BEST ALTERNATIVES
IMPLEMENT & PERFORM DECISION

DECISION MAKING PROCESS

Identify The Problem

 The decision-making process s tarts when a problem is
identified for action. If the problem is identified incorrectly or
the problem is too broad, then the entire decision-making
process may fail. .

 Therefore, the problem must be clearly defined and if a
specific goals must be achieved from the decision, it should be
measurable and timely, so that at the end of the process, it
can be evaluated whether the goals has been met.

 Define problem

 Identify an objective decision

 Identify the source of the problem

DECISION MAKING PROCESS

Form Alternatives

 Formation several alternatives enables managers to select the best
alternative.

 At least two relevant alternatives.
 Also can used brainstorming.
 Can used the principles.
 Formulate Possible Solutions To The Problems.
 Managers Should Explore Creative And Imaginative Alternatives.
 A Decisions Can Only Be Mad After All The Alternative Solutions Are

Collected.
 No Major Decisions Should Be Made Until Several Alternatives Have

Been Developed.
 A Common Method To Develop Alternatives Is By Brainstorming.
 Promote And Trigger Usable Ideas From Other Members
 Combine The Best Ideas From Others.
 Irrelevant Alternatives Will Be Rejected.
 Have A High Possibility Of Solving The Problem And Can Be

Implemented And Considered.
 Organizing Alternatives Is The Process Of Listing Suitable And

Unsuitable Alternatives.

DECISION MAKING PROCESS

Analyze Alternatives

 Evaluation will be made based on the strengths and weaknesses of each
alternatives.

 Alternatives must be evaluated according to pre-set criteria and values.
 Four factors that must be considered in evaluating alternatives:
1) Authority Factor
Who As The Final Say In The Selection Of Alternatives? Top –Level
Management Has The Right And Authority To Select The Best Alternative
For The Organization And For Major Decisions.
2) Biological Factor
Is The Organization’s Human Resources Able To Support The
Implementation Of The Selected Alternatives?
3) Technological Factor
Can The Physical Facilities In The Organizations Such As Machinery Support
The Implementation Of The Selected Alternatives?
4) Economics Factor
Can The Organizations Afford The Implementation Costs Of The Selected
Alternatives?

DECISION MAKING PROCESS

Select the best alternatives

 The effectiveness of each alternative is evaluated
 Measured based on two criteria:
 Is the alternative realistic based on the organizations

resources?
 How well can the alternative help solve the existing problem?
 Six criteria outline:
i. Feasibility
ii. Quality
iii. Acceptability
iv. Cost
v. Reversibility
vi. Ethics
 Managers must select the best alternative that is to

implemented
 The selection that is made will create the actual decision.
 Communication, motivation and leadership skills are vital to

ensure that the decisions is carried out successfully.

DECISION MAKING PROCESS

Implement and perform evaluation

 The implementation stage involves the use of managerial,
administrative and persuasive abilities to ensure that the
chosen alternative carried out.

 Managers must set a budget or schedule that has been
approved by the decision-maker.

 In the evaluation stage of the decision-making process,
decision makers and managers gather information that will tell
them how well the decision is the evaluation implemented

 Whether it was effective in achieving its goals

GROUP DECISION MAKING
TECHNIQUES

1. Brainstorming

This encourages
creative thinking

The relevant BRAINSTORMING Usually
alternatives will involves six
to 12 people
be evaluated

The most effective
alternative is selected

GROUP DECISION MAKING
TECHNIQUES

1. Brainstorming

 Brainstorming is a process of that encourages the free flow of
ideas without criticism or self-judgement.

 A brainstorming session usually involved 6 to 12 people.

 The team leader will inform the group problem and they will
encourages his team members to contribute as many
alternatives as they can.

 People are able to think more freely and move into new areas
of thought and so create numerous new ideas and solutions.

 Relevant alternatives will be evaluated and the most effective
will be selected.

 Example: a textile was discussion about how to increase the
sales

GROUP DECISION MAKING

TECHNIQUES

2. Nominal Group Technique

 The NGT technique is a modification and extension of
brainstorming, whereby vocal discussion is limited.

 Group members work alone but in the same room to develop
ideas

 The NGT process is as follows:
A. Team members meet as a group and are informed of the

problem faced. Each members write down the ideas.
B. Every member share their ideas verbally in a round-robin

fashion(one response per person each time) and these idea
will be recorder by other teams member
C. When the idea are recorded, discussion will commence
whereby questions will be asked clarification given.
D. After the discussion, each member evaluate the ideas and
individually vote for the best idea
E. The NGt enables groups to meet in a formal setting without
limiting the freedom of thinking. It eliminated the problems
of members who are concerned to be critics.

GROUP DECISION MAKING

TECHNIQUES

3. Delphi Technique

 The Delphi technique is a group decision-making technique that is
more complex and requires more time.

 This technique is similar to the NGT but members are not physically
present

 The steps involved in the Delphi technique as follows
a) identify the problem
b) members are instructed to provide solutions through a series of

specifically designed questions
c) every members completes the questionnaire in private
d) the results of the first questionnaire are compiled in one location and

duplicated
e) the compiled results are given to all members
f) members are instructed to propose a solution once again. It can be

the same or different
g) steps (e) and (f) are repeated until decision is achieved.

GROUP DECISION MAKING
TECHNIQUES

4. Electronic Meeting

 The EMS is a newer approach in group decision-making . This
technique is a combination of the NGT and the use of a sophisticated
computer technology .

 The steps in the EMS :
a) Computers are installed in the meeting room.
b) Group members hold a meeting via the computer network .
c) The problem shared with participants .
d) Individuals comments and aggregate voting will be projected on the

screen in the meeting.
e) Latest approach that covers the nominal group technique and the

usage of a sophisticated computer technology

 Advantage
i. create confidential, honest and fast reaction
 Disadvantages:
i. Manager slow in typing cannot participate in the meeting
ii. Participants contribute the best idea will not be rewarded
iii. Process exchanging information is limited

ADVANTAGES AND
DISADVANTAGES OF GROUP

DECISION MAKING IN AN
ORGANIZATION

Advantages Disadvantages

• More information •Time-consuming

•Diversity of views •Individual domination

•Greater acceptability •Compromise decisions

•Expert opinions •Expensive

•Degree of involvement •Groupies

TUTORIAL

a) The process of decision-making involves selecting
the most appropriate alternatives out of the

alternatives that are available. As a manager, you are
required to interpret any TWO (2) conditions of

decision making that will use to solve the problem in
the organization.

b) There are many group decision-making techniques
that can be used to make the decision making
process more effective and efficient. Exhibit any
TWO (2) of the techniques

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