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What is Decision Making Process? and also explain Steps of Decision Making Process.
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What is Decision Making Process?

  • Decision making is a daily activity for any human being. There is no exception about that. When it comes to business organizations, decision making is a habit and a process as well.

  • Effective and successful decisions make profit to the company and unsuccessful ones make losses. Therefore, corporate decision making process is the most critical process in any organization.

  • In the decision making process, we choose one course of action from a few possible alternatives. In the process of decision making, we may use many tools, techniques and perceptions.

  • In addition, we may make our own private decisions or may prefer a collective decision.

  • Usually, decision making is hard. Majority of corporate decisions involve some level of dissatisfaction or conflict with another party.

  • Let's have a look at the decision making process in detail.

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Steps of Decision Making Process:

Following are the important steps of the decision making process. Each step may be supported by different tools and techniques.

Step 1: Identification of the purpose of the decision

  • In this step, the problem is thoroughly analysed. There are a couple of questions one should ask when it comes to identifying the purpose of the decision.

Step 2: Information gathering

  • A problem of an organization will have many stakeholders. In addition, there can be dozens of factors involved and affected by the problem.

  • In the process of solving the problem, you will have to gather as much as information related to the factors and stakeholders involved in the problem.

  • For the process of information gathering, tools such as 'Check Sheets' can be effectively used.

Step 3: Principles for judging the alternatives

  • In this step, the baseline criteria for judging the alternatives should be set up.

  • When it comes to defining the criteria, organizational goals as well as the corporate culture should be taken into consideration.

  • As an example, profit is one of the main concerns in every decision making process. Companies usually do not make decisions that reduce profits, unless it is an exceptional case.

  • Likewise, baseline principles should be identified related to the problem in hand.

Step 4: Brainstorm and analyes the different choices

  • For this step, brainstorming to list down all the ideas is the best option.

  • Before the idea generation step, it is vital to understand the causes of the problem and prioritization of causes.

  • For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause-and-Effect diagram helps you to identify all possible causes of the problem and Pareto chart helps you to prioritize and identify the causes with highest effect.

  • Then, you can move on generating all possible solutions (alternatives) for the problem in hand.

Step 5: Evaluation of alternatives

  • Use your judgement principles and decision-making criteria to evaluate each alternative.

  • In this step, experience and effectiveness of the judgement principles come into play. You need to compare each alternative for their positives and negatives.

Step 6: Select the best alternative

  • Once you go through from Step 1 to Step 5, this step is easy. I

  • n addition, the selection of the best alternative is an informed decision since you have already followed a methodology to derive and select the best alternative.

Step 7: Execute the decision

  • Convert your decision into a plan or a sequence of activities. Execute your plan by yourself or with the help of subordinates.

Step 8: Evaluate the results

  • Evaluate the outcome of your decision. See whether there is anything you should learn and then correct in future decision making.

  • This is one of the best practices that will improve your decision-making skills.

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