Chapter 5 » Steps in decision making process | Business Studies – XII

Steps in decision making

1. Identification of problems:  the first step of decision making is identification of problems. First of all, managers must identify the problem. The problem has to be found and defined. Symptoms are identified and problems should be judged, symptoms are not problems. They are warning signs of problems. So, managers should search for symptoms for identification of problems. Such symptoms can be falling of sales, profit etc. It is said that problem identified is half solved is identification of problem should be effective.

2. Analysis of problem:  after identification of problems, the problem should be analyzed by the decision maker. It is the assembly of fact and clarifying it. Relevant information must be collected and analyzed according to the complexity and nature of problems.

3. Developing the alternative solution:  after identification and analysis of problems different probable solutions have to be developed which is known as developing the alternative solutions. there may be many alternative  past experience, expert opinion, discussions etc which may be helpful to develop the alternative

4. Evaluation of best alternative:  after developing the alternative solution evaluation of best alternative is done. It is determined that which alternative has how much advantage and disadvantages. in other words, alternatives  are evaluated in so many factors like cost factors, risk , benefits, facilities etc. therefore it is very important

5. Selection of best alternative:  after evaluating alternative, the best alternative is to be selected from various alternative. After developing alternative, the managers should taste each of them by imagining things that he has already put in effect. He should try to foresee the desirable consequences of adopting each alternative. It is done for best selection. therefore it is very important

6. Implementation of best alternative:  after selection of finest alternative, it must be used in the organization effectively. Effectiveness of decisions in achieving the desired goals depends upon its implementation. It they are not implemented effectively then best results can’t be obtained. Therefore proper implementation of best alternative is necessary.

7. Review of implementation:  it is the last step of decision making process. When the implementation of best alternative is reviewed, the process of decision making is finished. The result of implementation should be monitored and evaluated through which effectiveness can be measured. 

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