It is the process of choosing a course of action from among alternatives to achieve a desired goal.

It consist of activities a manager performs to arrive to conclusion.

1. Need for decision 2. Decision criteria

3. To allocate certain weightage to the criteria

4. To find out the different alternatives for the problem 5. Comparing strength and weakness and selecting the best alternative

PROBLEM A discrepancy between an existing and desired state of affairs. Characteristics of Problems: *A problem becomes a problem when a manager becomes aware of it. * there is a pressure to solve the problem. * the manager must have the authority, information, or resources needed to solve the problem.
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* factors that are important ( relevant) to resolving the problem.

* Costs that will be incurred (investment required). * Risks likely to be encountered ( chance of failure). * Outcomes that are desired ( growth of the firm).

* Assigning a weight to each item. * Places the items in the correct priority order of their importance in the decision making process.

* Developing Alternatives Identifying viable alternatives. * Alternatives are listed ( without evaluation) that can resolve the problem.

* Appraising each alternatives strengths and weaknesses. * An alternatives appraisal is based on its ability to resolve the issues identified in step 2 and step 3 i.e.. Identify decision criteria and allocation of weights

* The alternative with the highest total weight is chosen.

* Implementing the Alternative Putting the decision to and gaining comment from those whose will carry out the decision.

EXAMPLE:

* Identification of a problem Identification of Decision

My sales Reps need new computers! *Identification of Decision Criteria Memory and Storage, Display Quality, Better Life,Warranty *Allocation of weights to criteria

Carrying weight Memory and Storage-10, Display Quality -8, Better Life -6,Warranty 4, Carrying weight-3

*Development of alternatives Toshiba, HP, Soni Vaio, Qosmio, Gateway, Apple iBook, Lenovo, Dell *selecting and implementing best alternative DELL INSPIRON

1. Ability to convert the ideas into reality.

*A decision relates means to ends objectives.
*Means chosen to achieve an end must be justifiable. *It must lead to achievement of objectives.

2.Consistent performance *there should be a stability.

*Less changes in decision made by managers.

3.Thorough knowledge of the subject *A decision should taken through analysis and reasoning and weighing the alternatives.

*one should gather information from different sources

May be experts opinion or interviews etc.

4.Awareness of latest development

*Aware of competitors development *Aware of new technologies arising.

*Aware of change in policies of govt. and others.