What is Decision Making? Steps of Decision Making Process. Decision making models in business
WHAT IS DECISION MAKING?
“Efficient decision-making involves a series of steps that require the input of information at different stages of the process, as well as a process for feedback ”.
A decision making process involves following steps.
Define the problem
Determine the requirements that the solution to the problem must meet
Establish goals that solving the problem should accomplish
Identify alternatives that will solve the problem
Develop valuation criteria based on the goals
Select a decision-making Tool
Apply the tool to select a preferred alternative
Check the answer to make sure it solves the problem
THE RATIONAL DECISION MAKING PROCESS
The rational decision making process is a model that describes how the individuals should behave in order to maximize some outcomes. The six steps decision making model (Weihrich) is described below:
1. Define the problem
The model begins by defining the problem. A problem exists when there is a discrepancy between an existing and a desired state of affairs.
2. Identify the decision criteria
In this step, the decision maker determines what is relevant in making the decision. This step brings the decision maker's interests, values and similar personal preferences into the process.
3. Allocate weights to the criteria
The criteria identified are rarely all equal in importance. So the third step requires the decision maker to weight the previously identified criteria in order to give them the correct priority in the decision.
4. Develop the alternatives
The fourth step requires the decision maker to generate possible alternatives that could succeed in resolving the problem. No attempt is made in this step to appraise these alternatives, only to list them.
5. Evaluate the alternatives
Once the alternatives have been generated, the decision maker must critically analyze and evaluate each one. This is done by rating each alternative on each criterion.
6. Select the best alternative
The final step is this model requires computing the optimal decision; this is done by evaluating each alternative against the weighted criteria and selecting the alternative with the highest total score.
Ethical Issues in Business
An ethical issue is a problem, situation, or a opportunity that requires an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical. We must consider some ethical issues that are directly related to decision making process in business:
Honesty and Fairness:
Honesty refers to truthfulness, integrity, and trustworthiness; fairness is the quality of being just, equitable, and impartial. Honesty and fairness relate to the general moral attributes of decision makers. At a minimum, businesspeople are expected to follow all applicable laws and regulations.
Conflicts of Interest:
A conflict of interest exists when an individual must choose whether to advance his or her own interests, those of the organization, or those of some other group. To avoid conflicts of interest, employees must be able to separate their private interests from their business dealings. Organizations, too, must avoid potential conflicts of interest when providing products or services.
Fraud is any purposeful communication that deceives, manipulates, or conceals facts in order to create false impression. It is considered a crime, and convicts any result in fines, imprisonment, or both.
Fraud may be several types: Accounting fraud, marketing fraud and Consumer fraud
An ethical decision should not discriminate anyone related to business on the basis of race, sex, color, and national origin. Racial and sexual discrimination in the workplace creates ethical issues within the business world. Indeed, race, gender, and age discrimination are major source of ethical and legal debate in the workplace.
Some issues that must be addressed by businesses include technology, consumer privacy, site development and online marketing, and legal protection of intellectual properties, such as music, books, and movies. These subject matters must be included decision making process is ongoing.