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We have earlier studied that decision making is essential, right from the establishment of the business to its operation and development. But, it is difficult to select any one alternative out of various alternatives, due to managerial complications and the occurrence of various changes.
techniques of decision making in management
But, in the modern age, some new techniques have been developed, which may be helpful in making correct decisions by the decision-maker.
Various other methods or techniques of decision making in business management have been spelled out. These are briefly explained as follows:
Man is born with the tendency of doing various works. When he accomplishes various works and some type of works frequently, it becomes his habit of going on doing those works, by himself, which may include personal or organizational decision also.
It is due to this reason that when various managers are asked, how do they make the decisions, their reply is, decision making is their habit.
If they are asked, how do you make decisions, they say we don’t know.
Truly speaking, one Learns to take decisions by doing the same type of work and my experience, in respect of not only the repeated works but also for new works.
The person taking decisions by this method neither uses much of caution nor rational thinking.
Although the habits and experience help the managers to make decisions, even then they should take decisions only after analyzing and studying each problem and situation.
Related: 8 Major Steps of Decision Making Process in Business (With Examples).
2. Judgment and Intuition
Both of these methods are based on nature, experience, and physiological factors.
Hence, while taking decisions on the basis of basic methods, the physiological process operates in the hearts and minds of the managers.
Judgment and intuition methods are used for taking unprogrammed decisions since these problems in themselves are of a distinct nature.
This method or technique of making decisions is although the simple and economical, but involves risks.
Not only that, the problem may not be clearly specified by these methods, because these are variable, from man to man.
3. Technique of Opinion
Some decision-makers regard the opinions of other people as an important basis, for taking decisions.
Hence, the problem is presented in the group an opportunity is provided to all the members to consider it and present suggestions.
Thereafter, the problem is solved by collective deliberations and the decision at a certain point is taken.
4. Experiment or Test
This is a scientific method or technique of making decisions.
Today’s business has become highly competitive and before the production of any product on a large scale at the commercial level and its marketing, it’s trial or test is essential, Otherwise, losses may occur.
To avoid it managers use the techniques of market testing, media sources and consumer surveys, etc.
This method or technique of decision making is used for the selection of the best sources from various alternative sources and to know the risks involved in decisions to be taken as also for knowing the effectiveness of the decisions.
Related: 22 Types of Planning in Business Management.
5. Principles of Management
Principles of management provide guidelines for decision making to take suitable decisions.
Besides, these principles are also the guiding factors for managerial functions and activities.
Principles of management, in reality, provide directions to the total managerial functions.
There are rules of the road, but not the methods or techniques.
Principles management has lesser importance as a decision-making method or technique, but they may provide help in building up that environment in which they make the decisions.
Thus, these modern techniques of decision making in management is very useful.
In the modern age, the organizational structure is a systematic method of taking decisions in the managerial field.
In this method or technique, powers are delegated for taking managerial decisions and to provide strength to the flow of information in the organization.
Besides, by organizational structure, the managers get the information about expectations from them, to who is responsible and with whom contacts are to be made for information and resources?
This method is used for organizational decisions for programmed nature.
Related: 15 Primary Functions of Leadership in Management.
7. Standard Operating Procedures
Standard operating procedures are more formal and amenable to revisions to accommodate changes, in comparison of habit and nature methods or techniques, and hence is better.
techniques of decision making in management
This method or technique is used by unprincipled decision-makers.
These decisions are of the nature of rules of the decisions and of current plans, for ensuring strength to managerial decisions.
8. Model Building Technique
This technique of decision making is used for ascertaining various possibilities.
A model is built the product which is to be produced in the manufacturing sector and thereafter, the quality of the product is assessed to know the capability of the organization for producing any particular product, as also to assess whether the product produced by using the technical know-how and material available with the organization, will be liked or not and whether the marketing of produced commodity may cause change in the completing strength of the institution, any impact, and impact on the organization.
The answer to all such questions is obtained by building small models of the commodities to be produced.
When these models yield satisfactory results, only then the production of on large scale is started.
These days, several mathematical models are prepared, like – physical models, models for houses, production of cars and airplanes, etc.
Models for taking decisions regarding transportation, as also for preparing the schedule for distribution of sources of protection, and for control, etc.
Some particular techniques of the behavioral method for making decisions may be used for the direct evolution of various factors affecting decision making.
Similarly, there are behavioral methods for practical, physiological and other types of tests for the selection of employees for the specific task.
Behavioral Techniques or methods of decision making plays an important role in directing the process of future policy decision making.
Related: 15 Roles of Entrepreneur as Innovator (Explained).
10. Economic and Financial Techniques
Economic thoughts and marginal analysis principles have significantly contributed to the field of decision making.
These techniques are important for analysis and evolution and are also important sources for the selection of the best alternative.
In the financial technical process, the base of complete profits, the rate of return on invested capital, repayment or investment recovery, etc. provide an important base.
These days, statistical techniques are also used for decision making. Among these, probability, deduction, hypothesis, etc. are important.