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What Is a Decision?

A decision is a choice made from among alternative courses of action that are available. The purpose of making a decision is to establish and achieve organizational goals and objectives. The reason for making a decision is that a problem exists, goals or objectives are wrong, or something is standing in the way of accomplishing them.

Thus the decision-making process is fundamental to management. Almost everything a manager does involves decisions, indeed, some suggest that the management process is decision making. Although managers cannot predict the future, many of their decisions require that they consider possible future events. Often managers must make a best guess at that the future will be and try to leave as little as possible to chance, but since uncertainty is always there, risk accompanies decisions. Sometimes the consequences of a poor decision are slight; at other times they are serious.Choice is the opportunity to select among alternatives. If there is no choice, there is no decision to be made. Decision making is the process of choosing, and many decisions have a broad range of choice.

For example, a student may be able to choose among a number of different courses in order to implement the decision to obtain a college degree. Fox managers, every decision has constraints based on policies, procedures, laws, precedents, and the like. These constraints exist at all levels of the organization.

Alternatives are the possible courses of action from which choices can be made. If there are no alternatives, there is no choice and, therefore, no decision. If no alternatives are seen, often it means that a thorough job of examining the problems has not been done.

For example, managers sometimes treat problems in an eigher/or fashion; this is their way of simplifying complex problems. But the tendency to simplify blinds them to other alternatives.

At the managerial level, decision making includes limiting alternatives as well as identifying them, and the range is from highly limited to practically unlimited.

Decision makers must have some way of determining which of several alternatives is best - that is, which contributes the most to the achievement of organizational goals. An organizational goal is an end or a state of affairs the organization seeks to reach. Because individuals (and organizations) frequently have different ideas about how to attain the goals, the best choice may depend on who makes the decision. Frequently, departments or units within an organization make decisions that are good for them individually but that are less than optimal for the larger organization. Called suboptimization, this is a trade-off that increases the advantages to one unit or function but decreases the advantages to another unit or function. For example, the marketing manager may argue effectively for an increased advertising budget. In the larger scheme of things, however, increased funding for research to improve the products might be more beneficial to the organization.

These trade-offs occur because there are many objectives that organizations wish to attain simultaneously. Some of these objectives are more important than others, but the order and degree of importance often vary from person to person and from department to department.

Different managers define the same problem in different terms. When presented with a common case, sales managers tend to see sales problems, production managers see production problems, and so on.

The ordering and importance of multiple objectives is also based, in part, on the values of the decision maker. Such values are personal; they are hard to understand, even by the individual, because they are so dynamic and complex. In many business situations different people's values about acceptable degrees of risk and profitability cause disagreement about the correctness of decisions.

People often assume that a decision is an isolated phenomenon. But from a systems point of view, problems have multiple causes, and decisions have intended and unintended consequences. An organization is an ongoing entity, and a decision made today may have consequences far into the future. Thus the skilled manager looks toward the future

consequences of current decisions.