Posted by / Tuesday 28 November 2017 / No comments

Steps in the decision-making process

Definition and meaning of decision making
Decision making represents a process of choosing the best alternative from among many possible options available to the manager of the business unit. A manager at any given moment of making a decision concerning the business would first of all assess all the different alternative decisions which the business can take. Each of these alternative decisions will be looked at in terms of their advantages and disadvantages which are known to the managers of the business. From this evaluation, a final decision may be arrived at. Weighing the merits and demerits of each choice or option helps the managers of the company to make the best decisions.

One must bear in mind that decision making is an important function of management. Without this managerial function of decision making, other functions of management such as planning, directing, organizing and staffing cannot be performed because each of these function involve making decisions. In the words of Stephen Robins, “decision making is the selection of a preferred course of action from two or more alternatives.”

It is easy to fall into the trap of taking that decision at a go. Quiet on the contrary, decision making goes through several steps

Step 1. Identify the problems  
Problem identification constitutes the first step of decision making. Managers often make decisions to solve the problems they identify. Identified problem must be defined. Definition of the problem involves describing the problem and indicating what it might mean for the business; what the symptoms of the problems are. Symptoms are not the problems they are warning signs that the problem exists. For example, a fall in sales could be a symptom of poor product quality or availability of a better product in the market. The importance of identifying a problem lies in the wisdom that a problem once identified is half solved.  

Step 2. Analysis the problem
After a problem is identified, managers and their team must proceed to analyze the problem. Analysis of the problem involves finding the root cause of the problem, and figuring out the impact of the problem if left unsolved. Usually, the nature of the analysis depends on how complex and serious the problem is. In seeking to effectively analyze a problem, relevant information must be gathered about the problem. How effective and accurately the problems are analyzed will determine management’s ability to find the right solutions.

Step 3Developing alternative solution  
At this stage management develops various alternatives to solving the problem which has been analyzed. Each solution developed is based on the analysis carried out of the problem which has been identified. However, developing alternative solutions is only a step towards taking the decision considered as the best way of dealing with the problem. Alternative solution can also rely on the past experience of the manager, opinion of experts, brainstorming by management team etc., all of which may be helpful to developing the different alternatives.

Step 4Evaluation of best alternative  
After various alternatives have been developed, the best option from among the many solutions developed by management is carefully evaluated. At this stage the goal of management is to determine which of the solutions developed is the most cost effective or least expensive; which of them carries a greater risk factor; how much advantage and disadvantage comes with the solution and what extra benefit could the company obtain by choosing a solution. 

Step 5. Selection of best alternative  
After each alternative has been thoroughly examined and evaluated. Managers reach the stage where manager decide on the best choice of solution. This decision takes into account what the managers may have already done towards solving the problems and foreseeing desirable outcome of deciding on each decision and getting to decide on the one which offers the best, surest and if possible the cheapest answer to the problems of the business.

Step 6. Implementing the best alternative Selected
Upon deciding on the best solution, organization must proceed to implement that decision. Even though a lot of factors has been considered in arriving at the deciding on the best alternative among all others, how effective the decision choice is in helping the business achieve the business’ problem depends on how well it is implemented.  A good decision which is poorly implemented would yield a poor business result. Implementation is important.

Step 7. Reviewing the implementation 
This stage is often the last in the business decision making process. It involves monitoring and evaluating the implemented decision to see if everything has gone as expected. This allows the management of the firm to measure the effectiveness of the decision taken so that lessons can be drawn for the future or so that actions can be taken to modify the implementation process to suit the changing situations.   


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