National Institute of Technology 2009 M.B.A Finance ESSENTIALS OF MANAGEMENT - Question Paper

Q. 3: A) "Decision making is the primary task of the manager" Comment.
ANS:
Decision making is described as the selection of a course of action from among alternatives; it is at the core of planning. A plan cannot be stated to exist unless a decision -a commitment of resources, direction or reputation - has been made. Managers see decision making as their central job because they must constantly select what is to be done, who is to do it, and when, where, and occasionally even how it will be done.
The decision process is truly the core of planning. The process is as follows:
Premising
Identifying options
Evaluating options in terms of the goal sought
Choosing an option which is making a decision
Managers acting or deciding rationally are attempting to reach a few goal that cannot be attained without action. They must have a clear understanding of option courses by which a goal can be reached under existing circumstances and limitations. They also must have the info and the ability to analyze and evaluate options with regard to the goal sought.
A manager must settle for limited rationality or "bounded" rationality. In other words, limitations of information, time and certainly rationality even though a manager try earnestly to be completely rational. Since managers cannot be completely rational in practice, they sometimes allow their dislike of rise of risk - their desire to "play it safe" -to interfere with the desire to reach the best solution under the circumstances. This is also known as "satisfying" which means picking a course of action that is satisfactory or good enough under the circumstances.
Because there are almost always options - usually many - to a course of action, managers need to narrow them down to those few that deal with the limiting factors. These are the factors that stand in the way of achieving a desired objective. options are then evaluated in terms of quantitative and qualities factors. Other techniques for evaluating options include marginal analysis and cost effectiveness analysis. Experience, experimentation and research and analysis come into play in selecting an option.
Programmed and non programmed decisions are various. The former are suited for structured or routine issues. These types of decisions are usually made by lower level managers on -non managers. Non programmed decisions are used for unstructured and non routine issues and are made by upper level managers
Managers play a very important role in decision making because their decisions impact the success of their organizations. But Managers should be able to determine and weigh the risks involved in pursuing unusual ideas and translating them into innovative practices. Creativity, the ability and power to develop new ideas, is important for effective managing.

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