Techniques of decision making process

Techniques of decision making process

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  Techniques of Decision Making Process
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  Hello! We are M.Vamsi Krishna, P.Sampath, D. Madan, T. Krishna & Saandeep MBA- 1A, Aditya Global Business School, Surampalem. You can find me @Linkedin [email protected] 3
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  “Making Good Decisionsis a crucial skill at every Level- Peter F. Drucker 4
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  Synopsis  Decision  DecisionMaking Process  Techniques of Decision Making  Conclusion 5
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  Meaning 1) The actionor process of deciding something or of resolving a question. 2) It is a choice made from various available alternatives. What is Decision? 6
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  Decision making process Itrefers to a process by which individuals select a particular course of action among several alternatives to produce a desired result for predetermined objectives. The main purpose of it is to direct the resources of an organization towards a future goals and reduce the gap between the actual position and the desired position through effective problem solving and exploiting business opportunities. 7
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  Decision Making Process 8
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   Different DecisionMaking Techniques can improve decision outcomes and your effectiveness.  Different decision making techniques can provide unique advantages for specific decisions. 9 Techniques of Decision Making
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  Techniques of DecisionMaking Process 10
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  Techniques Marginal Analysis This techniqueis used in decision-making to figure out how much extra output will result if one more variable (e.g. raw material, machine, and worker) is added. In his book, ‘Economics’, Paul Samuelson defines marginal analysis as the extra output that will result by adding one extra unit of any input variable, other factors being held constant. Marginal analysis is particularly useful for evaluating alternatives in the decision-making process. Break even Analysis This tool enables a decision- maker to evaluate the available alternatives based on price, fixed cost and variable cost per unit. It is that point of sales at which the investments made and the profits generated by the firm are at equilibrium. Break-even analysis is a measure by which the level of sales necessary to cover all fixed costs can be determined. At the break-even point, total revenue equals total cost and the profit is nil. It helps to select and choose the most economical alternative. Financial Analysis This specifically focuses on the financial aspects of a prblem like the cost involved, the returns expected, the expected time required for the returns, etc. This is an invaluable tool in the hands of decision makers for evaluating various financial alternatives or financial aspects of the alternatives by analysing cash inflows and cash outflows. 11 Techniques of Decision Making
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  Paired Comparison Analysis Itis helpful in framing a decision when accurate data is not available to solve a particular problem. Instead of comparing a large no. of options this approach believes in reducing all available alternatives into pairs and then selecting the better option. It is a useful tool for making comparison of related as well as unrelated options like- decisions regarding purchasing a new machine or adopting latest technology or venturing in new markets. Paired comparison analysis facilitates the decision maker in setting priorities in case there is a dispute regarding utilisation of limited resources. 12 Techniques of Decision Making
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  Techniques Pareto Analysis It helpsin identifying the areas in the business that will help in raising maximum profits. The basic idea behind pareto principle is that 80% of the benefits can be achieved by putting 20% of efforts. Ratio Analysis It is an accounting tool for interpreting accounting information. Ratios define the relationship between two variables. The basic financial ratios compare costs and revenue for a particular period. The purpose of conducting a ratio analysis is to interpret financial statements to determine the strengths and weaknesses of a firm, as well as its historical performance and current financial condition. It also helps in studying the relationship between past and present financial reports. Operation Research This is perhaps the most scientific technique to understand industrial or commercial operations and predict outcomes. An operation research (OR) involves the practical application of quantitative methods in the process of decision-making. When using these techniques, the decision- maker makes use of scientific, logical or mathematical means to achieve realistic solutions to problems. Several OR techniques have been developed over the years like decision tree analysis, simulation, queuing, game theory and transportation models which are extremely significant for making sound decisions, 13 Techniques of Decision Making
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  Nominal Group Technique Inthis technique any form of communication or information sharing is restricted. Here the members put forth their suggestion on individual basis and finally all the suggestions are put to vote. The most popular suggestion is then accepted. In this technique individuals contribute their inputs individually and reach an unbiased decision as a group to approve the most favoured idea or solution. 14 Techniques of Decision Making
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  Techniques Brainstorming It isa creatve process that is free from group pressures and traditional decision making process. This is a time tested technique to broaden the base of decision making process by involving a large no. of persons and generating as many ideas as possible. This is a technique to generate uninhibited ideas without the fear of rejection or criticism. Grid Analysis This analytical tool is especially useful in taking complex decisions when there are a large number of alternatives, the choice is not obvious and there are multiple factors to contend with. It is highly evolved technique which helps the decision maker in making decisions where the desired alternatives are not available. Force Field Analysis It is a technique of weighing all the pros and cons of an issue i.e., the factors and forces in favour or against of a particular decision. By comparing the two set of options decision makers arrive at the decision which would have the least negative or adverse impact. 15 Techniques of Decision Making
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  Conclusion  When itcomes to making decisions, one should always weigh the positive and negative business consequences and should favour the positive outcomes.  This avoids the possible losses to the organization and keeps the company running with a sustained growth. Sometimes, avoiding decision making seems easier; especially, when you get into a lot of confrontation after making the tough decision.  But, making the decisions and accepting its consequences is the only way to stay in control of your corporate life and time. 16
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  Thanks! Any queries? You canfind me at @Facebook address vamsikrishnamulasa 17