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Decision making process and factors affecting it

Supply Chain Management Factors Affecting Decision-Making Some of the factors and personal characteristics that have on impact on the decision makers are described below.

Some factors are more important at higher levels of management and others are more important at lower levels. Programmed versus Non-programmed Decisions Programmed decisions are made in predictable circumstances and managers have clear parameters and criteria.

8 Things You Don’t Know Are Affecting Our Choices Every Day: The Science of Decision Making

Problems are well structured and alternatives are well defined. The problems are solved and decisions are implemented through established policy directives, rules and procedures. Non-programmed decisions are mode in unique circumstances and the results of such decisions are often unpredictable. Managers face ill-structured problems.

  1. Cut down your choices We often settle for default options or let others decide for us because decisions are just too much work for our brains. The higher the CO2 in the room, the more sharply our mental abilities decline.
  2. Less information is as dangerous as too much information.
  3. S, France and Korea.

These problems require a custom-mode response and are usually handled by the top management. To start a new business, to merge with another business or to close a plant are all examples of non-programmed decisions. For example, when Steven Jobs and Stephen Wozniak introduced the first Apple microcomputer in 1978, they were not certain about the market for it.

It must be recognized, however, that on individual has certain mental constraints, which limit the amount of information that he can adequately handle. Less information is as dangerous as too much information. Some highly authoritative individuals do make decisions on the basis of comparatively less information when compared to more conservative decision makers.

Decision Making: Factors that Influence Decision Making, Heuristics Used, and Decision Outcomes

Prejudice Prejudice and bias is introduced in our decisions by our perceptual processes and may cause us to make ineffective decisions. First, perception is highly selective, which means that we only accept what we want to accept and hence only such type of information filters down to our senses.

Second, perception is highly subjective, meaning that information gets distorted in order to be consistent with our pre-established beliefs, attitudes and values. For example, a preconceived idea that a given person or an organization is honest or deceptive, good or poor source of information, late or prompt on delivery, and so on, can have a considerable effect on the objective ability of the decision maker and the quality of the decision.

Factors Affecting Decision Making

For example, except for some unique circumstances, our memory is short term, having the capacity of only a few ideas, words and symbols. Also, we cannot perform more than a limited number of calculations in our heads and it is tough to compare all the possible alternatives and make a choice. Finally, psychologically, we are always uncomfortable with making decisions. We are never really sure if our choice of the alternative was correct and optimal until the impact of the implication of the decision has been felt.

This makes us feel insecure. Attitudes About Risk and Uncertainty These attitudes are developed in a person, partly due to certain personal characteristics and partly due to organizational characteristics.

  • In America, on the contrary, the decision-making style is generally individualistic with the help of decision models and quantitative techniques;
  • Theories have been generated to explain how people make decisions, and what types of factors influence decision making in the present and future;
  • This is particularly so when there are more than two options to choose from;
  • Other experiments reinforced this link; for example, in one, just thinking about words related to urination triggered the same effect;
  • Decision-making is not a pristine process;
  • The influence of the time since each judge had had a break was significant on the types of decisions they would make:

If the organizational policy is such that it penalizes losses more than it rewards gains, then the decision maker would tend to avoid the alternatives that have some chances of failure. Thus a manager may avoid a potentially good opportunity if there is a slight chance of a loss. The personal characteristics of a decision maker regarding his attitudes towards risk taking affect the success of the decision.

The risk-taking attitude is influenced by the following variables: Intelligence of the decision-maker: Higher intelligence generally results in highly conservative attitudes and highly conservative decision makers take low risks.

There are others who are more willing to take calculated risks if the potential rewards are larger and there is some chance of success. Expectation of the decision-maker: People with high expectations are generally highly optimistic in nature and are willing to make decisions even with less information.

The decision makers with low expectations of success will require more and more information to decide upon a course of action. As the complexity of the personal habits of the decision maker and the complexity of the decision variables increase, so does the time required to make a rational decision.

Even though there are certain individuals who work best under time pressures and may outperform others under severe time constraints, most people, require lime to gather all the available information for evaluation purposes. This approach may also be in use when the cost of gathering information and evaluating all such information is too high.

Personal Habits Personal habits of the decision-maker, formed through social environmental influences and personal perceptual processes decision making process and factors affecting it be studied in order to predict his decision-making style.

Some people stick to their decisions even when these decisions are not optimal. For example, Hitler found himself bound by his own decisions. Once he decided to attack Russia, there was no going back even when he realized that the decision was not the right one.

Some people cannot admit that they were wrong and they continue with their decisions even ignoring evidence which indicates that a change is necessary.

Factors Affecting Decision-Making

Some decision-makers shift the blame for failure on outside factors rather than their own mistakes. These personal habits have great impact on organizational operations and effectiveness.

  1. In addition to past experiences, there are several cognitive biases that influence decision making.
  2. We are never really sure if our choice of the alternative was correct and optimal until the impact of the implication of the decision has been felt. The research was done by Shai Danziger from Ben Gurion University of the Negev, and examined the results of 1,112 parole board hearings in Israeli prisons over a ten-month period.
  3. This style is culturally oriented and makes implementation of the decision much easier since everybody participates in the decision-making process.

Social and Cultural Influences The social and group norms exert considerable influence on the style of the decision-maker. Ebert and Mitchell define a social norm to be an evaluating scale designating on acceptable latitude and an objectionable latitude for behavior activity, events, beliefs or any object of concern to members of a social unit.

In other words social norm is the standard and accepted way of making judgements.

What Is the Most Important Factor Influencing Decision Making?

For example, in the Japanese organizational system, a decision maker arrives at a decision in consensus with others. This style is culturally oriented and makes implementation of the decision much easier since everybody participates in the decision-making process. In America, on the contrary, the decision-making style is generally individualistic with the help of decision models and quantitative techniques.