Significance / Nature of Decision Making

Significance of decision or nature of decision making is most important A manager faced with two or more feasible alternatives must decide which one to select.

Decision-making is, therefore, the process of identifying a set of feasible alternatives and choosing a course of action from them.

Nature of Decision Making

Weihrich and Koontz defined decision-making as the selection of a course of action from among alternatives. According to them, “it is the core of planning. A plan cannot be said to exist unless a decision-a commitment of resources, direction or reputation-has been made.”

Decision-making is a step in planning but it occupies a major part and the core of planning. Decisions are judgments which directly affect a course of action. An example will make the point clear.

While still in the second year HSC (Science Group), Hasan had to decide what to do after passing the HSC examination-go to a general university to do a B.Sc. (Hons.) degree or seek admission in a Medical or an Engineering College or University.

Hasan Mahbub collected information about a number of general and technical universities or institutes, reviewed the material, narrowed that list down to a number of alternatives, evaluated each alternative, applied to several such universities and institutes and then chose to attend Bangladesh University of Engineering and Technology or BUET.

In other words, Hasan did not merely go to college. He made a decision to go to a particular institution. Many managers use the terms “choice-making”, “decision-making” and “problem-solving” interchangeably.


But in fact these are different. Choice-making refers to the narrow set of activities associated with choosing one option from a set of already identified alternatives. Choice making is involved when a manager selects one of five applicants to hire for a computer operator’s job.

Decision-makings an intermediate-sized set of activities. It begins with problem identification and ends with choice making. Decision-making is necessary when a manager, for example, is faced with a problem that requires solution.

Problem-solving refers to the broad set of activities that involves finding and implementing a course of action to correct an unsatisfactory situation. It includes not only decision-making but also the implementation, monitoring and maintenance of the decision.

The following diagram depicts the steps involved indecision making and also shows the relationship between decision-making and choice making.

Diagram beside indicates, decision making includes four steps-recognizing the need for a decision (or problem identification), generating alternative solutions, evaluating the alternatives and then choosing an alternative (choice making).

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