This document discusses managerial decision making and the rational decision making process. It describes how managers are evaluated based on their decisions and the importance of results. The rational decision making process is similar to strategic planning and helps managers evaluate alternatives systematically. While rational decision making aims to find the best solution, it has limitations like not considering all alternatives due to constraints of time, information and uncertainty. The document also outlines the typical steps in a managerial decision making process and how to make a business plan.
2. Managerial decision making
• Decision-making is the process by which a
course of action is selected as the way to deal
with a specific problem.
• Managers are usually evaluated and rewarded on
the basis of the importance and results of their
decisions
4. Significance and limitations of rational
decision-making
• The process of rational decision-making is very
similar to the process of strategic planning.
5. Significance of rational decision-
making
• Managers who use a rational, intelligent and
systematic approach are more likely to come up
with high quality solutions.
• They have a clear understanding of alternative
courses of action
6. Significance of rational decision-
making
• It is based on the information available with the
decision-makers and their ability to evaluate
alternatives
• Rational decision-making aims a deciding the
best solution
7. Level of managers responsible for
making decisions
Middle –Level Management
Lower-Level Management
Upper-Level Management
Narrow
Intermediate
Decision Broad Decision
8. Limitations of rational decision-making
• Difficult for managers to be completely rational
• Difficult to determine all the alternative courses
of action
• Difficult to implement in areas not ventured into
9. Limitations of rational decision-making
• All possible alternatives cannot be thoroughly
analyzed
• Limitation of information, time and certainty
curb rationality
• Risk avoiding tendency disrupts their rational
decision-making process
10. Decision-making process
• Identify the problem
• Scanning stage
• Categorization stage
• Diagnosis stage
• Identify resources
• Generate alternative solutions
• Brainstorm
12. How to make a business plan
• The following steps are followed in the process
of making a business plan:
• 1. Understanding your business - Situation
Analysis
• 2. What do “you” want? – Forming Personal
Objectives
• 4. Forming the right business objectives
13. How to make a business plan
• 5. Forming Strategies And Tactics
•
6. Written Document
• 7. Review & Control and back to Step 1
