DECISION MAKING - TYPES OF DECISIONS- Programmed and non- programmed decisions , Strategic and tactical decision

 

DECISION MAKING

The word decision has been derived from the latin word ‘decidere’ which means a cutting away, or cutting off or in a particular sense.

Thus, decision involves a cut of alternatives between those that are desirable and those that are not desirable.

Decision making is a process to arrive at a decision, the process by which an individual/organization selects one position/action from several alternatives.

TYPES OF DECISIONS-

1.      Programmed and non- programmed decisions

Programmed decision-

·         It is of routine and of repetitive nature and is made within the framework of organization policies, procedures and rules. These policies, procedures and rules are established well in advance to solve recurring problems in the organization.

·         Example- the problem related to the promotion of the employees is solved by promoting those employees who meet promotion criteria. These criteria are established by promotion policies and managers have just to decide that which employee meet the criteria.

·         A programmed decision is comparatively easy to make as this relates to the problem which are solved by considering internal organizational factors.

·         These are made by personnel at lower levels where the environment affecting decision making is static and well structured.

Non – programmed decision-

·         It is relevant for solving unique/ unusual problems in which various alternative cannot be decided in advance.

·         Example- if an organization wants to take action for growth, it may have several alternative route like expansion of the same business or diversification in a new business. For further expansion, the managers have to evaluate the likely outcomes of each alternative to arrive at a decision, for which he have to consider various factors may lie outside the organization.

·         They are novel and non- recurring and therefore readymade solutions are not available.

·         These decisions are of high importance because of their long term consequences.

·         These are made by managers at higher level of the organization.

 

2.      Strategic and tactical decision-

 

Strategic decisions-

·         It is based on strategy which is a major plan in an organization.

·         It is a major one which affects the whole organization or its major parts.

·         It contributes directly to the achievement of organizational objectives.

·         A strategic decision has normally 3 elements-

a)      A course of action/plan known as action element

b)      A desired result/objective known as result element

c)      Commitment element.

 

·         A strategic decision is normally a non – programmed decision which is made under the conditions of partial ignorance.

·         These are to be made in context of environmental factors.

 

Tactical decisions-

·         Tactical/ operational decisions is of the nature of programmed decision and is derived from strategic decision.

·         It is related to day to day working of an organization.

·         It is made in the context of well set policies, procedures and rules.

·         These are mostly repetitive and are made very frequently.

·         The outcome of tactical decision is of short term nature and effect a narrow part of the organization.

·         The authority of making decision is delegated to lower level managers.