by Dinesh Thakur Category: Decision Making

The word “decision “is derived from the Latin word “decido”. Which means “A decision, therefore is

  • A Settlement
  • A fixed intuition to bringing to a conclusive result
  • A judgment
  • A resolution

Decision : A decision is the choice out of several options made by the decision maker to achieve some objective in a given situation.

Business Decision : Business decisions are those which are made in the process of conducting business to achieve its objective in a given situation.

Characteristic of Business Decision Making :

a) Sequential in nature.

b) Exceedingly complex due to risk and trade off.

c) Influenced by personal values.

d) Made in institutional setting and business environment.

Rational Decision Making : A rational decision is the one which, effectively and efficiently, ensure the achievement of the goal for which the decision is made .In reality there is no right or wrong decision but a rational decision or irrational decision which depends on situation.

Type of Rationality :

Objectively : Maximum the value of the objectives.

Subjective : If it is minimize the attainment of value in relation to the knowledge and awareness of subject.

Consciously : Extent the process of the decision making is a conscious one

Organizationally : degree of the orientation towards the organization.

Personal: Rational to the extent is achieve’s an individual’s personal reason (goals).

Type of Decision Making System : There are two types of decision making system on the basis of knowledge about the environment.


(i) Closed : If the manager operates in a known environment then it is called closed decision making system.

Conditions :

a) Manager knows the set of decision alternative and know their outcome in term of values.

b) Manager has a model, by which decision alternatives can be generated, tested and ranked.

c) The manager can choose one of them, based on some goal or objective.

(ii) Open : If the manager operates in unknown environment then it is called open decision making.

Conditions :

a) Manager does not know all alternatives.

b) Outcome is not known.

c) No methods or models are used.

d) Decide objective or goal; select one where his aspirates or desire are met best.

Types of Decision : Types of decision are based on the degree of knowledge about the out come of the events which are yet to take place.

Certainty : If the manager has full knowledge of event or outcome then it is a situation of certainty.

Risk : If the manager has partial knowledge or probabilistic knowledge then it is decision under risk.

Uncertainty : If the manager does not have any knowledge, it is decision making under uncertainty MIS converts the uncertainty to risk and risk to certainty. The decision at the low level management is certain, at middle level of the management the decision is under risk and at the top level management the decision is in under uncertain.

Nature of decision : Decision making is a complex task. To resolve the complexity the nature of decision are of two types :

Programmed and Non-Programmed Decision :

a) If a decision can be based on a rule, methods or even guidelines, it is called the programmed decision.

b) A decision which can not be made by using a rule or model is the non-programmed decision.

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About Dinesh Thakur

Dinesh ThakurDinesh Thakur holds an B.C.A, MCSE, MCDBA, CCNA, CCNP, A+, SCJP certifications. Dinesh authors the hugely popular blog. Where he writes how-to guides around Computer fundamental , computer software, Computer programming, and web apps. For any type of query or something that you think is missing, please feel free to Contact us.