Management Decision Making Process

Decision making is the cognitive process leading to the selection of a course of action among alternatives. Business managers seem to make decisions and afterwards look for ways to justify the decisions. Why business is conducted this way? What is the process for decision making?. A numbers of decision making areas currently are receiving attention in global business. The way in which decision making is carried out will be influenced by a number of factors including the culture. In general the following sequences are used to make decisions.

1. Problem Recognition

Managers in master-of-destiny cultures tend to perceive most situations as problems to be solved, and they seek improvement through change. On the other hand, managers in fatalistic societies tend to accept situations as they are, and they are, and they do not seek improvement or change; they believe that fate or God’s will intervene in management decision making process. The United States society is an example of the master-of-destiny culture.

2. Information Gathering

Decision makers in some cultures rely on hard facts and data as bases for a decision. The non programmed approach to decision making would therefore be applied in these cultures. In many cultures, however, decision makers do not place a high premium on factual information and data; instead, they rely more on their instincts as a basis for decision making. Since decision makers in these cultures rely on their intuition, they would not be highly receptive to the application of the non programmed decision making process.

3. Choice and Implementation

In some cultures such as the United Kingdom and Canada, the choice and implementation tactics are determined either by the highest ranking member of the decision making team or by a majority vote. But in collectivist cultures such as Japan and Africa, to maintain harmony and unity, decisions are made by consensus. When group consensus is required, decisions normally take a long time to make. The process of obtaining consensus is often more important that the choice itself. In contracts, choice and implementation decisions in individualistic societies are normally made quickly because decision makers tend to be autocratic and make decisions by themselves. (The ensuing sections will discuss this more thoroughly). Furthermore, decision makers in individualistic cultures are likely to select the most economically efficient choice. On the other hand, decision makers in collectivist societies are likely to select a choice that does not offend members of the group. Thus, in troubles times, an American Corporation might lay off employees as a way of dealing with the problem, whereas a Japanese corporation would not – it would seek to maintain group harmony and therefore seek other solutions.

In some cultures, decision makers are very methodical, and they carefully evaluate numerous alternative choices before making a selection; in other cultures, decision makers use an incremental approach – they discuss alternatives in a preplanned sequence, making decisions as they go along. Furthermore, as will also be discussed in the ensuing sections, individuals in some cultures take greater risks than individuals in other cultures. For instance, in deciding on a foreign market entry strategy, decision makers in the lower risk taking cultures may select the safer exporting approach; decision makers in the higher risk taking cultures may select a riskier approach, such as producing aboard.