Sunday, September 11, 2005


Types of Decisions
The word decision - making denotes choice of alternatives. The most frequent decision is the programmed decision ( like the mail clerk decision to decide the postage ) - ( In a bigger organization mail comes to mail clerk and he reads and decides that this paper should go to Purchase , or account or brewer or distiller or manger HRD or Directors or sale).-- Information gives the decision.

The second type is the operational decision where information plays an important role - but judgment has to be used. Each manager may use a judgment in a different way and we get different decisions when the information is essentially the same.

Judgment plays a more important role in the strategic decision e.g. location of factory, product mix, technology, plant capacity,etc. These are vital decisions. If these decisions are wrong, in spite of good operational decisions, the factory may end up in a disaster. In the case of strategic decision, although lot of information is collected,intuition plays the deciding role.

The last category of decisions is the entrepreneurial decision. These are essentially three: How much to invest,Where to get resources from,Who should be the chief executive.These are vital decisions for the long term success of an organization. In these decisions , information plays a very small role. The entrepreneur taking these decisions will have to use his judgment to the full extent and this is why these are called entrepreneurial decisions.
A person becomes King or Pauper due to these decisions.

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