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Decision-Making Process
•A set of eight steps that includes identifying a
problem, selecting a solution, and evaluating
the effectiveness of the solution
•“Choosing from alternatives”
•Problem: A discrepancy between an existing
and a desired state of affairs
•Decision Criteria: Factors that are relevant in a
decision
EXHIBIT 4–2The Decision-Making Process
Step 1: The identification of a problem
•Problem is a discrepancy between an existing
and a desired state of affairs.
•Problem identification is subjective.
➢The manager who mistakenly solves the wrong
problem perfectly is likely to perform just as poorly as
the manager who fails to identify the right problem
and does nothing.
➢Ex. Car is broken
Step 1’Cont.
•Managers must compare their current state of
affairs and some standard
➢past peformance
➢previously set goals
➢performance of some other unit within the
organization or in other organizations in
order to be aware that they have a
discrepancy.
➢Ex. Broken car /against a vehicle that runs
Step 2: Identification of Decision Criteria
•Every decision maker has criteria explicity stated
or not-that guide his/her decision.
•If a decision maker does not identify a particular
factor, it is treated as irrelevant.
EXHIBIT 4–3Criteria and Weights in Car-Buying Decision
(Scale of 1 to 10)
Step 4: Development of Alternatives: Only listing
