The word decision has been derived from the Latin word
"decidere" which means "cutting off". Thus, decision
involves cutting off of alternatives between those that are desirable and those
that are not desirable.
words of George R. Terry, "Decision-making is the selection based on some
criteria from two or more possible alternatives".
Characteristics of Decision Making
making implies that there are various alternatives and the most desirable
alternative is chosen to solve the problem or to arrive at expected results.
decision-maker has freedom to choose an alternative.
may not be completely rational but may be judgemental and emotional.
is a mental or intellectual process because the final decision is made by the
may be expressed in words or may be implied from behaviour.
from among the alternative courses of operation implies uncertainty about the final
result of each possible course of operation.
making is rational. It is taken only after a thorough analysis and reasoning
and weighing the consequences of the various alternatives.
TYPES OF DECISIONS
a) Programmed and Non-Programmed Decisions: Herbert Simon has grouped organizational decisions into two categories based on
the procedure followed. They are:
Programmed decisions: Programmed
decisions are routine and repetitive and are made within the framework of organizational policies and rules.
These policies and rules are established well in advance to solve recurring
problems in the organization. Programmed decisions have short-run impact. They
are, generally, taken at the lower level of management.
Non-Programmed Decisions: Non-programmed decisions are decisions taken to meet non-repetitive problems.
Non-programmed decisions are relevant for solving unique/ unusual problems in
which various alternatives cannot be decided in advance. A common feature of
non-programmed decisions is that they are novel and non-recurring and
therefore, readymade solutions are not available. Since these decisions are of
high importance and have long-term consequences, they are made by top level
Strategic and Tactical Decisions: Organizational decisions may also be classified
as strategic or tactical.
Strategic Decisions: Basic decisions or strategic decisions are
decisions which are of crucial
importance. Strategic decisions a major choice of actions concerning allocation
of resources and contribution to the achievement of organizational objectives.
Decisions like plant location, product diversification, entering into new
markets, selection of channels of distribution, capital expenditure etc are
examples of basic or strategic
Tactical Decisions: Routine
decisions or tactical decisions are decisions which are routine and repetitive. They are derived out of strategic
decisions. The various features of a tactical decision are as follows:
decision relates to day-to-day operation of the organization and has to be
taken very frequently.
decision is mostly a programmed one. Therefore, the decision can be made within
the context of these variables.
outcome of tactical decision is of short-term nature and affects a narrow part
of the organization.
The authority for making tactical decisions can
be delegated to lower level managers because: first, the impact of tactical
decision is narrow and of short-term nature and Second, by delegating authority
for such decisions to lower-level managers, higher level managers are free to
devote more time on strategic decisions.