Материал: Management-and-Organization-Behavior

3.Appropriateness in the light of available Resources:

Formulationofastrategyrequiresarealisticassessmentoftheresources of the enterprise-men, money and materials – both existing resources and the resources it can command. The resources of an enterprise also include the skills of management and other manpower, command over sources of scarce raw materials, production facilities, technology, marketing capabilities and image, and so on. It is desirable that the every enterprise formulates its strategy within the limitations imposed by its resources. The objective is to ensure that the enterprise’s resources are not over-stretched or over-strained on the one hand and to utilize the existing and commendable resources in the best possible manner on the other.

4.Acceptable degree of Risk: Any major strategy carries with it certain element of risk and uncertainty because it covers a long future horizon and because it seeks to cope with complex environment. The degree of risk inherent in a strategy should be within the bearable capability of the enterprise. Resources should not be committed irrevocable, nor should they be a concentrated on a single or narrow range of ventures. Also, there should be a match between risk and returns, financial and otherwise.

5.Appropriate Time Horizon: Time is the essence of any strategy. While a reasonably long time span imparts some flexibility, the problem has to be reckoned with, however, of forecasting is ever present. How far in the future can top management predict with credibility is a measure of its capability An optional time span cannot be mathematically determined; it is a matter of environmental conditions, the objectives to be sought and the judgment of management.

6.Workability: A strategy should be feasible and produce desired results within the constraints and parameters known to the management. It should be realistic and relatively simple to understand and implement. Certain quantitative measures like volume of sales and profit, growth rate, asset formation, market share, introduction of new products and so on are to be set. These are to be combined with qualitative criteria like the degree of confidence with which managers implement the strategy, the extent to which major areas of

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decision situations are handled by reference to the criteria embedded in the strategy, the extent to which opportunities are exploited, threats averted, resources mobilised, and environmental control gained.

Review Questions

1.Examine how policies influence decision making behaviour of a manager.

2.Explain the different types polices and their sources.

3.Explain how policies are formulated in general.

4.Take any functional areas of business of your choice and highlight the major areas that you would formulate policy.

5.Distinguish between polices and strategies.

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Lesson -8 : Decision Making

Objectives

After reading this lesson, you should be able to:

ӹӹUnderstand The Meaning And Characteristics Of Decision Making;

ӹӹExplain The Types Of Decisions;

ӹӹExamine The Process Of Decision Making; And

ӹӹUnderstand The Techniques Of Decision Making.

Lesson Outline

ӹӹTypes Of Decisions

ӹӹDecision Making Process

ӹӹTechniques Of Decision Making.

ӹӹReview Questions

It is said that decisions are the principal diet on which a manager thrives. It is decision-making power which distinguishes a manager from others in an organization. Hardly a day passes without making some decision or other in the executive’s life. Whatever a manger does, he does through making decisions. As such, decision-making constitutes the most exciting and eventful part of any executive’s career. Considering the importance of decision-making some authors even view it synonymously with management.

In the course of managing an organisation, the manager is confronted with several problems which require immediate and appropriate solutions. Such problems are solved by making decisions. For instance, break-down of machinery, customers’ complaint on quality, delay in collection of receivables, some industrial relations problem at the shop-floor level leading to unrest among the employees, just to mention a few call for timely solutions. That apart, in some cases, though there is no

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any problem as such – to increase productivity, market share, profitability, some major decisions have to be taken. Thus, a manager has to make decisions covering several aspects of the organisation.

Decision-making in simple may be defined as “the selection of a future course of action from among various alternatives’. It presupposes the existence of various alternatives. It is in a way a choice between alternatives. In other words, if there are no alternatives, there is no choice. Therefore, the question of decision-making and the associated dilemma do not arise. Thus, the following characteristics emerge from the definition of decisionmaking.

Characteristics

ӹӹDecision making is a continuous process

ӹӹIt involves a choice and therefore presupposes the existence of alternatives

ӹӹDecision making is always purposive in that decisions should aim at achieving some purposes

ӹӹIt is an intellectual process supported by sound-reasoning and judgment

ӹӹ Decision-making is all pervasive in the sense that all levels of managers take decisions, though at the impact and scope of decisions vary.

Type of Decisions

Decisions taken by managers may be classified under various categories depending upon the scope, importance and the impact that they create in the organisation. The following are the different types of decisions:

1. Programmed and Non-programmed Decisions

Programmed decisions are normally repetitive in nature. They are the easiest to make. Usually these decisions are taken in consultation with the existing policy, rule or procedure which are already laid down in the organisation. For example: making purchase orders, sanctioning of

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different types of leave, increments in salary, settlement of normal disputes, etc. Managers in dealing with such issues of routine nature usually follow the established procedures.

On the other hand, non-programmed decisions are different in that they are non-routine in nature. They are related to some exceptional situations for which there are no established methods of handling such things. For example: Issues related to handling a serious industrial relations problem, declining market share, increasing competition, problems with the collaborator, growing public hostility towards the organisation fall in this category. Problems like these have to be handled in a different way. While different managers reach the same solution in the case of programmed decision because they are guided by the same policy or procedure, the solutions may widely differ in the case of non-programmed decisions. As one moves up in the hierarchy, many of the decisions that managers make are non-programmed in nature.

It is important to note that the effectiveness of a manager lies in handling exceptional situations. Such situations call for ingenuity and sound judgment. Surprisingly, many managers get bogged down in the routine issues at the cost of the non-routine issues. The saying that “routine drives out the non-routine” instead of the other way round is true in many organizations. Such a tendency results in devoting less time for the important issues.

2. Operational and Strategic Decisions

Operational or tactical decisions relate to the present. The primary purpose is to achieve high degree of efficiency in the company’s ongoing operations. Better working conditions, effective supervision, prudent use of existing resources, better maintenance of the equipment, etc., fall in this category. One the other hand, expanding the scale of operations, entering new markets, changing the product mix, shifting the manufacturing facility from one place to the other, striking alliances with other companies, etc., are strategic in nature. Such decisions will have far reaching impact on the organisation. Usually, operating decisions do not need intensive deliberations and huge resources and are taken by managers at the lower levels while strategic decisions require extensive deliberations and huge resources and are taken by top level managers. The focus in the operational

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