Shruti Speak's

(a) Ascertaining the problem: As Peter Drucker points out, .the most common source of mistakes in the management decisions is the emphasis on finding the right answers rather than the right questions.. The main task is to define the right problem in clear terms. The management may define the problem as the .Sales are declining. Actually, the decline of sales is symptomatic; the real problem may be somewhere else. For example the problem may be the poor quality of the product and you may be thanking of improving the quality of advertising. (b) Insufficient knowledge: For perfect rationality, total information leading to complete knowledge is necessary. An important function of a manager is to determine whether the dividing line is reached between insufficient knowledge and the enough information to make a decision. (c) Not enough time to be rational: The decision maker is under pressure to make decisions. If time is limited, he may make a hasty decision which may not satisfy the te...

A rational decision is the one which, effectively and efficiently, ensures the achievement of the goal for which the decision is made. If it is raining, it is rational to look for a cover so that you do not get wet. If you are in business and want to make profit, then you must produce goods and sell them at a price higher than the cost of production. 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 o...

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. Human performance in decision making terms has been the subject of active research from several perspectives. From a psychological perspective, it is necessary to examine individual decisions in the context of a set of needs, preferences an individual has and values they seek. From a cognitive perspective, the decision making process must be regarded as a continuous process integrated in the interaction with the environment. From a normative perspective, the analysis of individual decisions is concerned with the logic of decision making and rationality and the invariant choice it leads to. Yet, at another level, it might be regarded as a problem solving activity which is terminated when a satisfactory solution is fo...