Decision Making Be Chosen By The Management - 1399 Words

Decision making could be defined as the process of choosing the best alternative out of several ones in order to fulfill the objective of the organization and to increase the shareholders wealth. The process of choosing the best alternative from a given set of projects involves various quantitative and qualitative analysis of the available set of alternatives, to decide on the viability of the project or projects that are going to be chosen by the management. One important factor in the decision making process is to decide on the costs relevant for the alternative set of projects. Relevant costs are those which will affect the decision making process directly or indirectly. All future costs which will have to incur because of the†¦show more content†¦There are seven steps in effective decision making: Step 1: Identify the decision to be made. You realize that a decision must be made. You then go through an internal process of trying to define clearly the nature of the decision you must make. This first step is a very important one. Step 2: Gather relevant information. Most decisions require collecting pertinent information. The real trick in this step is to know what information is needed the best sources of this information, and how to go about getting it. Some information must be sought from within you through a process of self-assessment; other information must be sought from outside yourself-from books, people, and a variety of other sources. This step, therefore, involves both internal and external â€Å"work†. Step 3: Identify alternatives. Through the process of collecting information you will probably identify several possible paths of action, or alternatives. You may also use your imagination and information to construct new alternatives. In this step of the decision-making process, you will list all possible and desirable alternatives. Step 4: Weigh evidence. In this step, you draw on your information and emotions to imagine what it would be like if you carried out each of the alternatives to the end. You must evaluate whether the need identified in Step 1 would be helped or solved through the use of each alternative. In going through this difficult internal process, you begin to