One of the basic functions performed by business managers is decision making. Decision making is the core of the planning process because it translates plans, policies and objectives into concrete organizational actions.
The decision making process is a mechanism for managers who want to take logical and rational decision.
The effectiveness of decision outcomes is dependent on the nature and structure of the decision making process. Managers should think of the decision making process as an important aspect of organizational growth. The first step is to:
-Define the problem: A problem occurs when there is variation between actual performance and performance standard.
-Identify appropriate alternatives: After recognizing and defining of problems, the next step is to develop appropriate alternative courses of action to address the situation/problem.
-Evaluate each alternative: The alternative courses developed in anticipation to select the one that best suits the problem. This evaluation is done in light of the available resources and stated goals.
-Choose the best alternative: A business manager selects the most appropriate course that he believes will yield the best outcome regardless of the situation.
-Execute the Plan- Selected alternative must be carefully implemented to meet objectives and avoid a waste of time and resources.
-Alter the plan and look for improvements: This last stage deals with monitoring and measuring of actual results, comparing it with budgeted performance, and making necessary correction if there is deviation.
Managers must always select what is to be done, who is to do it, when, where and even sometimes how it will be done.