Decision-making – definition and types of decision-making

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Decision-making is a very important part in life. It is also a part and parcel of the business world. We make a variety of decisions every day; so do managers and business owners to run their businesses. Managers make decisions in the best interest of their organisations. So, what is decision-making? What does it mean? Let’s explore it then.

Definition of decision-making

Let’s first focus on the term ‘decision’. It usually means making a choice between two or more alternatives. Business writers regard decision-making as a process. According to Holt (1990) decision making is the process of identifying problems and opportunities, developing alternative solutions, choosing a preferred alternative, and then implementing it.

According to Attner & Plunkett (1994, p.159) ‘decision making is a process – decisions don’t come out of nowhere, like lightning bolts. In making a decision, the manager reaches a conclusion based on the evaluation of options or alternatives’.

Types of decision-making

Managers make a variety of decisions every day. Decisions can generally be divided as programmed decisions and non-programmed decisions. Programmed decisions are repetitive decisions that managers make in line with the established business rules or procedures. On the other hand, managers make non-programmed decisions when they face ill-structured or novel problems. These decisions tend to be complex.

Decisions can also be divided in line with the managerial levels in organisations e.g. strategic decisions and non-strategic decisions. Top level managers usually make strategic decisions. These decisions are long-term and complex decisions. On the other hand, operational managers make non-strategic decisions. These decisions also called operational decisions.

Many people often find it difficult to make decisions, particularly when they face new and complex problems. Whether difficult or not, we all have to make decisions very often. Just imagine that you are thirsty and need to choose between fizzy drinks and water. Which one will you choose? Likewise, imagine that your business is going through serious difficulties and you need to choose between a massive re-investment and closing-down. Which one will you choose? As you can see, this decision is far more difficult than making a choice between fizzy drinks and water. However, fortunately or unfortunately, you cannot shy away from making a decision.

We hope this article has been helpful. You may also like reading the Decision-making unit. If you liked this article, feel free to share it by clicking on the icons below.

The article publication date: 10 February 2018

Further reading/references

Attner and Plunkett (1994), Introduction to Management, 5th Edition, International Thomson Publishing

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Author: Marjana Chowdhury

Marjana Chowdhury is a graduate of Queen Mary, University of London. She has a keen interest in business, accounting and computer science. She writes regularly online on a variety of subjects.