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Some decisions are of the routine kind. They are decisions
which are made quickly, and are based on judgement. Because
a
manager is experienced, he knows what to do in certain situa-
tions. He does not have to think too much before taking action. For
example, a supervisor in a supermarket may decide to give a refund
to a customer who has brought back a product. The manager does
not have to gather a great deal of additional information before
making the decision.
Many decisions are more difficult to make since they involve
problem-solving. Very often, they are
strategic decisions invol-
ving major courses of action which will affect the future of the
enterprise. To make good decisions, the manager should be able
to select a course of action. In practice, decisions are usually made
in circumstances which are not ideal. They must be made quickly,
with insufficient information.
When
a complex problem arises, like which new products to
develop, the manager has to collect facts and weigh up courses of
action. A useful approach to this sort of decision-making is as fol-
lows:
defining the problem;
analysing and collecting information;
working out Options and
deciding on the best solution.
As
a first step, the manager must identify and define the
problem. Consider the case of a department store which finds that
profits are falling and sales decreasing rapidly. The falling profits
and sales are symptoms of a problem. The manager must ask himself
what the store’s real problem is.
Does the store have the wrong image?
Is it selling the wrong goods?
Or the right goods at the wrong prices?
Are its costs higher than they should be?
At this early stage, the manager must also take into account
the rules and principles of the company
which may affect the final
decision. These factors will limit the solution of the problem.
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One company may have a policy of buying goods only from
home suppliers; another firm might, on principle, be against making
special payments to secure a contract; many
enterprises have a rule
that managerial positions should be filled by their own staff, rather
than by hiring outside personnel. Rules and policies like these act
as constraints, limiting the action of the decision-taker.
The second step is to analyze the problem and decide what
additional information is necessary before a decision can be taken.
Getting the facts is essential in decision-making. However, the
manager will rarely have .all the knowledge he needs. This is one
reason why making decisions involves a degree of risk: It is the
manager’s job to minimize that risk.
Once the problem has been defined and the facts collected,
the manager should consider the options available for solving it.
This is necessary because there are usually
several ways of solving
a problem. In the case of the department store, the management
may decide that the store has the wrong image. A number of ac-
tions might be possible to change the image. New products could
be introduced and existing lines dropped; advertising could be
stepped up; the store might be modernized
or customer service
might be improved.
Before making a decision, the manager will carefully assess
options, considering the advantages and disadvantages of each one.
Having done this, he will have to take a decision.
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