Decision Making Approaches
There are different approaches managers can use for decision-making to come to an effective choice in order to achieve desired goals. Generally, there are three approaches to managerial decision making which are mentioned below.
The Classical Approach
The classical approach to decision-making is also known as a prospective approach since it makes the assumption that managers are logical and rational. Therefore, they will make decisions that are best for the company.
It explains to managers the decision-making process. This method makes the assumption that all issues are well stated and that all data necessary to make a decision is available.
Managers are aware of all of the options and their advantages and disadvantages. It is expected that evaluation standards are known. Computers can provide them with knowledge and assistance so they can make wise decisions.
The Administrative Approach
The descriptive model of decision-making, often known as the administrative approach, states that decision-makers are unable to obtain comprehensive and accurate information. They are limited by restricted rationality and have a tendency to be satisfying.
This method makes the assumption that managers may have to make judgments in scenarios that involve ambiguity, uncertainty, and non-programmed choices. Decision-makers are restricted by the limits of their reason. Its potential is constrained by beliefs, values, attitudes, aptitudes, skills, routines, credentials, knowledge, and resources.
The administrative method also argues that decisions are satisfying and that people tend to look for the next option only until they find one that is at least acceptable.
The Rational Approach
In the rational approach, the function of decision-making is completed by step by step process where managers identify the best alternative (s). The rational decision-making process usually involves certain steps for effective decision-making.
The steps include the following,
- Defining the problems
- Identification of alternatives
- Evaluating alternatives
- Selecting the best alternative
- Implementing selected alternatives, and
- Follow up and evaluation of the decision.