[Commerce Class Notes] on Types of Decisions Pdf for Exam

Decision Making Process

Decision making is considered one of the most important tasks of management. The manager plays a crucial role in serving his/her decision, as the growth and failure of an organization are dependent on timely decisions taken. Each managerial decision like planning, organizing, staffing, and directing are all parts of decision making. 

A decision is a process that is consciously chosen from among a set of desired options to achieve the result.

Types of Decision Making

The managers or non-managers have to make decisions at some point to get their organizational goals done. These decisions are categorized further. The types of decision making in an organization are as follows:

1. Programmed And Non-Programmed Decisions:

Programmed decisions are routine and repetitive in nature. These decisions deal with common and frequently occurring problems in an organization such as buying behaviour of consumers, sanctioning of different types of leave to employees, purchasing decisions, salary increment, etc. 

Non-programmed decisions are not routine or common in nature. These are related to exceptional situations in which guidelines or routine management is not set. For example, problems arising from a decline in market share, increasing competition in the business environment. The majority of the decisions taken by managers do fall in this non programmed category.

2. Operational and Strategic Decisions:

Operational decisions are just the normal functioning of the organization. These decisions do not require much time and take a shorter time as compared to other decisions taken. Ample of responsibilities are delegated to subordinates. The main decision is to create harmony in an organization and to see whether the management is proper or not. 

Strategic decisions include all present issues and problems. The main idea is to achieve better working conditions, better equipment, and efficient use of existing equipment, etc. These all fall under this category. Usually, strategic decisions are taken by top-level management.

3. Organizational and Personal Decisions:

If the decision is taken collectively keeping in mind the organizational goal, it is known as the organization goal, and if the manager takes any decision in the personal capacity (affecting his/her life). It is known as personal decisions. These decisions may sometimes affect the functioning of the organization as well. For example, if the employee has decided to leave the organization, it may affect the organization. The authority of taking personal decisions cannot be delegated and is dependent on the individual itself.

4. Major and Minor Decisions:

These are classified as the type of decision-making in management where decision-related to purchase of new premises is a major decision. These are taken by top management whereas the purchase of stationery is a minor decision. Minor decisions can be taken by the superintendent.

5. Individual and Group Decisions:

When the decision is taken by an individual, it is categorized as an individual decision. Usually, routine decisions are taken by individuals within the policy framework of the organization.

Group decisions are taken by a group of individuals in the form of a standing committee. Generally, important types of decisions in management are shifted to this committee. The main aim of a group decision is to involve the maximum number of individuals in the process of decision making.

6. Tactical and Operational Decisions:

Decisions that are pertaining to various policy matters in the organization are known as policy decisions. These are taken by top management and do have a long-term impact on the organization. For example, decisions regarding the location of the plant or volume of production. These are tactical decisions

Operational decisions are all day-to-day decisions that need to be taken for the proper functioning and operation of the organization. These can be taken by middle or lower-level managers. For example, the Calculation of bonuses given to each individual is an operational decision and is performed by middle or lower-level managers. 

These were the types of managerial decisions that are performed by top, middle and lower-level management in the organization to get things done in alignment and to achieve the organizational goal effectively and efficiently. 

Buying Decision Behavior

There are other decisions pertaining which is to be looked at in an organization. One of them is buying decisions. Below will be discussed the types of buying decisions in an organization, also known as B2B buying. There are three types of decision making while going for B2B purchases. 

1. A New Task 

where a business buyer purchases for the first time and is introduced to the new product or service for the first time in his/her organization.

2. The Modified Rebuy

It is a business buying situation where the buyer wants to modify product or service specifications, price or terms, and conditions.

3. Straight Rebuy

In this situation, the buyer routinely reorders without any specifications or alterations needed.

These three situations highly determine B2B purchases. There are other factors as well which alters the type of buying decision behaviour. These are as follows:

1. Awareness about brand competing in product group

2. Decision criteria of customers

3. Evaluation and decision is done on the choice of consumer