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University of Luzon
College of Business Administration
Dagupan City
Module 1 – Entrepreneurial Behavior and Personality 1
Module II–
THE DECISION MAKING PROCESS
The Decision‐Making Process
Organization operate by people making decisions. A manager plans,
organizes, staffs, leads, and controls her team by executing decisions. The
effectiveness and quality of those decisions determine how successful a
manager will be.
Managers are constantly called upon to make decisions in order to solve
problems. Decision making and problem solving are on-going processes of
evaluating situations or problems, considering alternatives, making choices,
and following them up with the necessary actions. Sometimes the
decision‐making process is extremely short, and mental reflection is essentially
instantaneous. In other situations, the process can drag on for weeks or even
months. The entire decision‐making process is dependent upon the right
information being available to the right people at the right times.
The decision‐making process involves the following steps:
1.Define the problem.
2.Identify limiting factors.
3.Develop potential alternatives.
4.Analyze the alternatives.
5.Select the best alternative.
6.Implement the decision.
7.Establish a control and evaluation system.

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The decision‐making process begins when a manager identifies the real
problem. The accurate definition of the problem affects all the steps that follow;
if the problem is inaccurately defined, every step in the decision‐making
process will be based on an incorrect starting point. One way that a manager
can help determine the true problem in a situation is by identifying the
problem separately from its symptoms.
The most obviously troubling situations found in an organization can
usually be identified as symptoms of underlying problems. These symptoms all
indicate that something is wrong with an organization, but they don't identify
root causes. A successful manager doesn't just attack symptoms; he works to
uncover the factors that cause these symptoms. All managers want to make the
best decisions. To do so, managers need to have the ideal resources —
information, time, personnel, equipment, and supplies — and identify any
limiting factors. Realistically, managers operate in an environment that
normally doesn't provide ideal resources. For example, they may lack the
proper budget or may not have the most accurate information or any extra
time. So, they must choose to satisfice — to make the best decision possible
with the information, resources, and time available.
Time pressures frequently cause a manager to move forward after
considering only the first or most obvious answers. However, successful
problem solving requires thorough examination of the challenge, and a quick
answer may not result in a permanent solution. Thus, a manager should think
through and investigate several alternative solutions to a single problem before
making a quick decision.
One of the best known methods for developing alternatives is
through brainstorming, where a group works together to generate ideas and
alternative solutions. The assumption behind brainstorming is that the group

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Dagupan City
dynamic stimulates thinking — one person's ideas, no matter how outrageous,
can generate ideas from the others in the group. Ideally, this spawning of ideas
is contagious, and before long, lots of suggestions and ideas flow.
Brainstorming usually requires 30 minutes to an hour. The following specific
rules should be followed during brainstorming sessions:
Concentrate on the problem at hand. This rule keeps the discussion very
specific and avoids the group's tendency to address the events leading up to
the current problem.
Entertain all ideas. In fact, the more ideas that come up, the better. In other
words, there are no bad ideas. Encouragement of the group to freely offer all
thoughts on the subject is important. Participants should be encouraged to
present ideas no matter how ridiculous they seem, because such ideas may
spark a creative thought on the part of someone else.
Refrain from allowing members to evaluate others' ideas on the spot.All
judgments should be deferred until all thoughts are presented, and the group
concurs on the best ideas.
Although brainstorming is the most common technique to develop alternative
solutions, managers can use several other ways to help develop solutions. Here
are some examples:
Nominal group technique. This method involves the use of a highly structured
meeting, complete with an agenda, and restricts discussion or interpersonal
communication during the decision‐making process. This technique is useful
because it ensures that every group member has equal input in the
decision‐making process. It also avoids some of the pitfalls, such as pressure to
conform, group dominance, hostility, and conflict, that can plague a more

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interactive, spontaneous, unstructured forum such as brainstorming.
Delphi technique. With this technique, participants never meet, but a group
leader uses written questionnaires to conduct the decision making.
No matter what technique is used, group decision making has clear advantages
and disadvantages when compared with individual decision making. The
following are among the advantages:
Groups provide a broader perspective.
Employees are more likely to be satisfied and to support the final decision.
Opportunities for discussion help to answer questions and reduce
uncertainties for the decision makers.
These points are among the disadvantages:
This method can be more time‐consuming than one individual making the
decision on his own.The decision reached could be a compromise rather than
the optimal solution.Individuals become guilty of groupthink — the tendency of
members of a group to conform to the prevailing opinions of the group.
Groups may have difficulty performing tasks because the group, rather than a
single individual, makes the decision, resulting in confusion when it comes
time to implement and evaluate the decision.
The results of dozens of individual‐versus‐group performance studies indicate
that groups not only tend to make better decisions than a person acting alone,
but also that groups tend to inspire star performers to even higher levels of
productivity.

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Dagupan City
So, are two (or more) heads better than one? The answer depends on several
factors, such as the nature of the task, the abilities of the group members, and
the form of interaction. Because a manager often has a choice between making
a decision independently or including others in the decision making, she needs
to understand the advantages and disadvantages of group decision making.
The purpose of this step is to decide the relative merits of each idea. Managers
must identify the advantages and disadvantages of each alternative solution
before making a final decision.
Evaluating the alternatives can be done in numerous ways. Here are a few
possibilities:
Determine the pros and cons of each alternative.
Perform a cost‐benefit analysis for each alternative.
Weight each factor important in the decision, ranking each alternative relative
to its ability to meet each factor, and then multiply by a probability factor to
provide a final value for each alternative.
Regardless of the method used, a manager needs to evaluate each alternative
in terms of its
Feasibility — Can it be done?
Effectiveness — How well does it resolve the problem situation?
Consequences — What will be its costs (financial and nonfinancial) to the
organization?
After a manager has analyzed all the alternatives, she must decide on the best

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one. The best alternative is the one that produces the most advantages and the
fewest serious disadvantages. Sometimes, the selection process can be fairly
straightforward, such as the alternative with the most pros and fewest cons.
Other times, the optimal solution is a combination of several alternatives.
Sometimes, though, the best alternative may not be obvious. That's when a
manager must decide which alternative is the most feasible and effective,
coupled with which carries the lowest costs to the organization. (See the
preceding section.) Probability estimates, where analysis of each alternative's
chances of success takes place, often come into play at this point in the
decision‐making process. In those cases, a manager simply selects the
alternative with the highest probability of success.
Managers are paid to make decisions, but they are also paid to get results from
these decisions. Positive results must follow decisions. Everyone involved with
the decision must know his or her role in ensuring a successful outcome. To
make certain that employees understand their roles, managers must
thoughtfully devise programs, procedures, rules, or policies to help aid them in
the problem‐solving process.
Ongoing actions need to be monitored. An evaluation system should provide
feedback on how well the decision is being implemented, what the results are,
and what adjustments are necessary to get the results that were intended
when the solution was chosen.
In order for a manager to evaluate his decision, he needs to gather information
to determine its effectiveness. Was the original problem resolved? If not, is he
closer to the desired situation than he was at the beginning of the
decision‐making process?

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Dagupan City
If a manager's plan hasn't resolved the problem, he needs to figure out what
went wrong. A manager may accomplish this by asking the following questions:
Was the wrong alternative selected? If so, one of the other alternatives
generated in the decision‐making process may be a wiser choice.
Was the correct alternative selected, but implemented improperly? If so, a
manager should focus attention solely on the implementation step to ensure
that the chosen alternative is implemented successfully.
Was the original problem identified incorrectly? If so, the decision‐making
process needs to begin again, starting with a revised identification step.
Has the implemented alternative been given enough time to be
successful? If not, a manager should give the process more time and
re‐evaluate at a later date.
THE INFLUENCE OF ENVIRONMENT IN DECISION MAKING
Whenever we are involved in making decisions a number of factors can affect
the process we follow and ultimately the decision we make.
We can organise the factors affecting decision making into three major groups:
 Perception Issues
 Organisational Issues
 Environmental Issues

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Perception
Issues:
Perception can be described as the way in which individuals
interpret their environment. An individual's perception can
influence how they make decisions and solve problems. For
example, when information about a problem needs to be
gathered the individual's perception will impact on where the
information is sought and the type of information regarded as
relevant.
Perception can be influenced by the following:
 The perceiver
 The object
 The situation
The Perceiver
The perceiver, the individual perceiving the object, will be
heavily influenced by their personal characteristics. The types
of personal characteristics that can affect an individual's
perception include:
 Background and experience
 Personal values
 Personal expectations
 Personal interests
The Object
The object, which refers to any person, item or event can have
an impact on the way it is perceived. For example, when a
manager receives a number of reports to read he may be more

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inclined to read the one with the most colourful cover as this
one stands out.
The relation an object has to other objects can also affect the
perception of the perceiver. For example, an individual team
member may be judged on the actions of the whole team even
when it is more appropriate for them to be judged on their own
merits.
The Situation
Time, location and other situational factors can influence our
perception of an object. For example, a Team Leader may
notice team members who work late on the same evenings as
the Team Leader. However, team members who work late on
other evenings may not be noticed by the Team Leader.
Issues
within the
Environment:
Environmental issues are the external factors that affect
the organisation. The types of external factors that can
have an effect on decision making include:
 The market in which the organisation operates
 The economy
 Government legislation
 Customers' reaction to the organisation's products
and services

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Dagupan City
Common
Decision
Making
Mistakes:
Many of the factors which affect the decision making process
can lead to mistakes being made. By being aware of the types of
mistakes that can be made and by understanding the reasons
for the mistakes a Team Leader is in a better position to avoid
making them.
Some common mistakes that decision makers should be aware
of include:
 Only hearing and seeing what we want. Each individual
has their own unique set of preferences or biases which
blinker them to certain information. The best way to deal
with this problem is to identify your preferences and
biases whilst attempting to be open to the information
around you.
 Placing too great a reliance on the information you receive
from others. Often we rely on certain individuals to
provide support and guidance. This may be a suitable
course of action in many cases. However, if the individual
is not closely involved in the problem situation they may
not have the necessary information or knowledge to help
make the decision.
 Placing too little emphasis on the information you receive
from others. This issue can easily occur in a team
situation. In many cases the team members are the
people who are most closely involved in a problem
situation and they often have the most pertinent
information in relation to the problem. The best way to
deal with this issue is to ensure that team members are
involved in the decision making process.

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 Ignoring your intuition. On many occasions we are
actually aware at a subconscious level of the correct
course of action. Unfortunately, we often tend to ignore
our intuition.

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Dagupan City
Issues
within the
Organisation:
A number of organisational issues can impact on the decision
making process. These issues include:
Policies and procedures
Organisational hierarchy
Organisational politics
Policies and Procedures
Many organisations have formalised policies and procedures
which have been developed to resolve common problems and to
guide managers when making decisions. For example, many
organisations have documented disciplinary procedures which
guide managers through a process of resolving issues with staff
members.
Organisational Hierarchy
Organisational hierarchy refers to the management structure of
the organisation. Most organisations have different levels of
management which carry with them different degrees of
authority. The degree of authority directly impacts on the
nature of the decisions an individual can make. For example, a
Customer Contact Centre Team Leader cannot make decisions
about the overall goals of the organisation. However, the Team
Leader can make decisions about how their team contributes
to the achievement of the organisation's goals.
Organisational Politics
Organisational politics refers to behaviour displayed by
individuals and groups which is designed to influence others.
Individuals and teams will often use politics to:
Advance their careers

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Advance their interests and ideas
Increase their rewards
Organisations are made up of individuals with different beliefs,
values and interests. These differences are often the driving
forces behind organisational politics. For example, two teams
believe they require an extra team member. Unfortunately the
organisation can only afford one new employee. The two teams
may well use politics in an attempt to influence their manager
to allocate the new employee to their team.
PLANNING AND DECISION MAKING
Planning is the important and primary function of management. It sets
all other functions into action. It is the beginning of process of management. A
manager must plan before coming in action. It is concerned in deciding in
advance what to do? How to do? When to do? Why to do? Where to do? And
who to do? And answering all these questions depends upon intelligence.
Planning is a fully mental work.
Planning is the conscious process selecting and developing the best
course of action to accomplish an objective. It is the process of deciding in
advance what is to be done .it also involves the selection of objectives, policies,
procedures and programs from among alternatives. It also includes selecting
purposes and objectives of the actions to achieve them. Planning requires
decision-making that is choosing from among alternative future course of
action.
Thus: Planning is
 Planning is concerned with future and it helps the management to look
ahead.

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 It involves thinking about organization’s prosperity and helps analysis of
information.
 It involves a predetermined course of action.
 It specifies the objectives to be attained in future.
 It is basically a problem of choosing from the alternative courses of
action.
 It relates with thinking before doing.
 It involves both decision making and problem solving.
 Its objective is to achieve better results.
Planning is a Primary Function of Management:-
1. Planning is a Primary Function of Management. Setting of goals and lines of
action precedes the organization, direction, supervision and control. Planning
precedes other functions of management. It is primary requisite but all
functions are inter-connected.
2. Thinking and intellectual process: – Planning is intellectual process of
predetermined thinking. It is a process of deciding about future actions. It
includes the process where a number of steps are to be taken to decide the
future course of action. Managers consider various courses of action which is
necessary to achieve the desired goals and learn about the merits and demerits
of every course of action and then finally decide what course of action may suit
them best.
3. Planning is a continuous process: – Planning is a continuous process
of a manager upon some assumptions. Therefore, the manager has to revise
and adjust plans in the changing circumstances. Planning is a continuous
process It involves continuous collection, evaluation and selection of data, and
scientific investigation and analysis of the possible alternative courses of action
and the selection of the best alternative.

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Dagupan City
Procedures of planning
1. Setting objectives: – objectives are the main part of plan. Setting objectives
is the first step of formulating plans, the success or failure of plan depends
upon the objectives of the organization. To determine the objectives is the first
step and most important procedure of making plan
2. Developing planning premises: – after setting the objectives of the
organization planning premises is necessary. It is the second step of
formulating plans. Premises are the assumptions of internal and external
environment of the organization in which plans are to be implemented. It is
related to collect and make analysis of information concerning internal and
external environment.
3. Determining alternatives: – after developing planning premises the third
step of formulating plan is to determine the alternatives. The process of
searching and identifying alternatives is known as determining alternatives.
There may be so many alternatives. Reasonable alternatives should be selected
among them
4. Evaluating alternatives:- after determining alternatives, each and every
alternatives must b evaluated separately. After that, it is determined that which
alternative has how much advantage and disadvantages. In other words, plans
are evaluated in so many factors like cost factors, risk , benefits, facilities etc
5. Choosing one course of action: – after evaluating alternatives one best
alternative must be selected. When all the alternatives are evaluated then all
the weaknesses and strength of the alternatives are known. After this, best
alternative must be selected. It is the most important step of planning.
6. Formulating detail plan of action: – after choosing one course of action,
detailed plan must be formulated. Selecting one course of action is the
organized plan. After choosing organizational plan, other departmental plan
must be formulated. In other words, basic plan must be expanded into
functional areas.

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7. Implementation of plan:- Without this step, other procedures of plan
remains as a paper work. This step brings all procedures of plan into action.
8. Reviewing the panning process;- the planning procedures is a continuous
function up to the attainment of defined objectives. For this purposed, the
evaluation of achievement of work according to time is necessary to know
about actual performance.
Proactive in a Reactive World
So how can we apply this proactive thinking to our everyday lives? How can we
make the shift from to being proactive versus reactive?
1. Notice reactive behaviour.
Begin with the little things in your life, not with the death of a loved one or the
suffering of innocent people. Just the everyday situations; in work perhaps, or
in your relationships.
Notice your reactive behaviour when it occurs, in the moment. Maybe you
swear at someone who cut you up in traffic, or you let down because your
favourite team lost again.
And likewise, note how many others around you do the same, and how easy it
is to be reactive. Don’t judge, just watch. It’s a big first step.
2. Watch your language.
Our language tells us a lot about our level of reactivity or proactivity.
Reactive people tend to use ―I can’t‖, ―If only‖, ―I have to‖. These phrases are
shifting the blame to outside circumstances, getting rid of responsibility.
To be more proactive, consciously change these to more positive, empowering

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Dagupan City
phrases. ―I can‖, ―I will‖, ―I want to‖. A simple change in language can make a
big difference.
3. Analyse your past mistakes.
Whilst you can control your actions, you can’t always control the
consequences.
Invariably, you’ll have made mistakes in your past – we all have. But we
can’t change the past, so dwelling on those mistakes is a form of reactive
behaviour.
Instead, accept that you made them, take whatever you can learn from them,
let them go, and move on.
4. Make commitments.
Making goals and working towards them can help empower you and reinforce
the control you have over your life. If you achieve what you set out to, you
realise that you can be responsible for your circumstances, regardless of the
external forces.
Time to be more proactive
Becoming more proactive is essentially a practice of mindfulness. It involves
you becoming more aware of everything that is going on in the moment.
Just like during a meditation session, during your proactivity practice you’ll
notice how easy it is to slip into reactive mode. You’ll realise how so many
others live their lives on reactive autopilot.As with everything, take your time
and don’t be too hard on yourself. We’ve been raised in a reactive world, and
have developed lifelong habits that will take time to change.

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TIME MANAGEMENT
Time is valuable to us. Think about it: How much of your typical work week do
you spend stressed about not having enough time to complete a task or reach a
goal?There are lots of different ways to tackle the issue of time management —
you can download apps, adjust your sleep time, create lists, etc. But if you
don’t fully understand why it’s important for you to better manage your time,
those apps and lists aren’t going to help you. If you don’t have the motivation
to use them, you won’t.
Practical Techniques in managing your time
1. Carry a schedule and record all your thoughts, conversations and activities
for a week. This will help you understand how much you can get done
during the course of a day and where your precious moments are going.
You'll see how much time is actually spent producing results and how much
time is wasted on unproductive thoughts, conversations and actions.
2. Any activity or conversation that's important to your success should have a
time assigned to it. To-do lists get longer and longer to the point where
they're unworkable. Appointment books work. Schedule appointments with
yourself and create time blocks for high-priority thoughts, conversations,
and actions. Schedule when they will begin and end. Have the discipline to
keep these appointments.
3. Plan to spend at least 50 percent of your time engaged in the thoughts,
activities and conversations that produce most of your results.

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4. Schedule time for interruptions. Plan time to be pulled away from what
you're doing. Take, for instance, the concept of having "office hours." Isn't
"office hours" another way of saying "planned interruptions?"
5. Take the first 30 minutes of every day to plan your day. Don't start your day
until you complete your time plan. The most important time of your day is
the time you schedule to schedule time.
6. Take five minutes before every call and task to decide what result you want
to attain. This will help you know what success looks like before you start.
And it will also slow time down. Take five minutes after each call and activity
to determine whether your desired result was achieved. If not, what was
missing? How do you put what's missing in your next call or activity?
7. Put up a "Do not disturb" sign when you absolutely have to get work done.
8. Practice not answering the phone just because it's ringing and e-mails just
because they show up. Disconnect instant messaging. Don't instantly give
people your attention unless it's absolutely crucial in your business to offer
an immediate human response. Instead, schedule a time to answer email
and return phone calls.
9. Block out other distractions like Facebook and other forms of social media
unless you use these tools to generate business.
10. Remember that it's impossible to get everything done. Also remember
that odds are good that 20 percent of your thoughts, conversations and
activities produce 80 percent of your results.

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