Decision making can be regarded as an outcome of mental processes (cognitive process) leading to the selection of a course of action among several alternatives. Every decision making process produces a final choice. The output can be an action or an opinion of choice.
Decision making is a reasoning or emotional process which can be rational or irrational, can be based on explicit assumptions or tacit assumptions.Thus here an important concept comes of RATIONAL DECISION MAKING
Rational Decision Making
A rational decision is the one which, effectively and efficiently, ensures the achievement of the goal for which the decision is made. In reality, there is no right or wrong decision but a rational or an irrational decision. The quality of decision making is to be judged on the rationality and not necessarily on the result it produces. The rationality of the decision made is not the same in every situation. It will vary with the organization, the situation and the individual’s view of the business situation. The rationality, therefore, is a multi-dimensional concept. For example, the business decisions in a private organization and a Public Sector Undertaking differ under the head of rationality. The reason for this difference in rationality is the different objectives of the decision makers.
Simon Herbert differentiates among the types of rationality. A decision, in a given situation is:
Objectively rational if it maximizes the value of the objective.
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Subjectively rational if it maximizes the attainment of value in relation to the knowledge and awareness of the subject.
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Consciously rational to the extent the process of the decision making is a conscious one.
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Organizationally rational to the degree of the orientation towards the organization.
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Personally rational to the extent it achieves an individual’s personal goals.
Decision making is a reasoning or emotional process which can be rational or irrational, can be based on explicit assumptions or tacit assumptions.Thus here an important concept comes of RATIONAL DECISION MAKING
Rational Decision Making
A rational decision is the one which, effectively and efficiently, ensures the achievement of the goal for which the decision is made. In reality, there is no right or wrong decision but a rational or an irrational decision. The quality of decision making is to be judged on the rationality and not necessarily on the result it produces. The rationality of the decision made is not the same in every situation. It will vary with the organization, the situation and the individual’s view of the business situation. The rationality, therefore, is a multi-dimensional concept. For example, the business decisions in a private organization and a Public Sector Undertaking differ under the head of rationality. The reason for this difference in rationality is the different objectives of the decision makers.
Simon Herbert differentiates among the types of rationality. A decision, in a given situation is:
Objectively rational if it maximizes the value of the objective.
•
Subjectively rational if it maximizes the attainment of value in relation to the knowledge and awareness of the subject.
•
Consciously rational to the extent the process of the decision making is a conscious one.
•
Organizationally rational to the degree of the orientation towards the organization.
•
Personally rational to the extent it achieves an individual’s personal goals.
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