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HERBERT SIMON MODEL OF DECISION MAKING
Transcript of HERBERT SIMON MODEL OF DECISION MAKING
HERBERT SIMON MODEL
DECISION MAKING DECISION-MAKING CONCEPT:
A decision is choice out of several alternatives (options) made by the decision maker to achieve some objective s in a given situation. Business decisions are those, which are made in the process of conducting business to achieve its objective in a given environment. Managerial decision-making is a control point for every managerial activity may be planning, organizing, staffing, directing, controlling and communicating. Decision-making is the art of reasoned and judicious choice out of many alternatives. Once decision is taken, it implies commitment of resources. The business managers have to take variety of decision. Some are routine and others are long-term implementation decision. Thus managerial decisions are grouped as:
(a) Strategic decision
(b) Tactical decision
(c) Operation decision 1. Strategic Decision: these are known as major decision influence whole or major part of the organization. Such decisions contribute directly to the achievement of common goals of the organization; have long range effect upon the organization.
Generally, strategic decision is unstructured and thus, a manager has to apply his business judgment, evaluation and intuition into the definition of the problem. These decisions are based on partial knowledge of the environmental factors which are uncertain and dynamic, therefore such decision are taken at the higher level of management. 2. Tactical Decision: tactical decision relate to the implementation of strategic decisions, directed towards developing divisional plans, structuring workflows, establishing distribution channels, acquisition of resources such as men, materials and money. These decisions are taken at the middle level of management. 3. Operational Decision: operational decisions relate
to day-to-day operations of the enterprise having a short-term horizon and are always repeated. These decisions are based on facts regarding the events and do not require much of business judgments.
Operational decisions are taken at lower
level of management. TYPES OF DECISION-MAKING SYSTEMS
The decision-making systems can be classified in a number of ways. There are two types of systems based on the manager’s knowledge about the environment. If the manager operates in a known environment then it is a closed decision-making system. The conditions of the closed-decision making systems are:-
I. The manager has a known set of decisions alternatives and knows their outcomes fully in terms of value, if implemented. II. The manager has a model, a method or a rule whereby the decision alternatives can be generated, tested and ranked for selection.
III. The manager can choose one
of them, based on some goal or objective criteria (a) Intelligence: searching the environment for
condition calling for decisions. The phase consists
of determining that a problem exists (b) Design: during this phase a set of alternative
solution is generated and tested for feasibility. (c) Choice: in this phase, the decision-maker select one of the
solution identified in the design phase. A management information system (MIS) provides information that organizations need to manage themselves efficiently and effectively. Management information systems are distinct from other information systems, in that they are used to analyze and facilitate strategic and operational activities. Management means to manage information in an organized menner to make information useful Information collect the organized and meaningful data A system means co-related components which work together for the same goal. Thank you Group member- Ajit kumar