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Different types of Decisions

Types of Decisions

Types of Decisions

Decisions may be classified in a variety of ways:

  1. Routine and Strategic Decisions-

    Routine decisions are repetitive and taken against a familiar background in day-to-day business operations. Such decisions involve no extraordinary judgement, analysis and authority. They are to traverse through more or less fixed avenues. Organization’s goals, policies rules and procedures are clearly established and the routine decisions demand a selection of the shortest path as the connecting link between given means and established ends on the part of managers.

On the other hand, strategic decisions are non-repetitive, vital and important and aim at determining or changing the ends or means of the enterprise. They require a through study analysis and reflective thinking on the part of managers. Normally the routine decisions are taken by operative managers in the organization while strategic decisions are taken by top managers. Routine decisions are also called minor or operative decisions and the strategic decisions may also be called by the name of major, vital or policy decisions.

  1. Short-term and Long-term Decisions-

    Short-term decisions affect short span of period and involve less uncertainty and risk. While long term decisions commit the organization for a longer period and as such involve more risk and uncertainty. Longer the period covered by a decision greater is the risk and uncertainty and so, greater is the need for careful analysis of all important factors, more conscious thinking and periodical revisions. Long-term decisions are generally taken by the top management; and short term decisions are usually transferred to the subordinate and operative managers.

  2. Organizational and Personal Decisions-

    Decisions, taken in the official capacity by a manager is called organizational decision, but when the manager taken a decision in his personal capacity and not as the member of the organization, it is known as personal decision. Organizational decisions may be divided as inter-departmental and departmental decisions. Departmental decisions relate to a particular department or division of an organization while interdepartmental decisions embrace the whole organization. Interdepartmental decisions are invariably taken by top executives while departmental decision usually fall within the jurisdiction of departmental managers.

  3. Economic and Non-economic Decisions-

    Economic decisions are based on the cost the financial considerations, while non-economic decisions are based on non-economic considerations, like ethical values moral conduct, human, values, religious social and cultural factors, For instance, retrenching a permanently disabled employee who has met with an accident while working on the machine in the factory, might be economically justified, but retaining him in the service is all the more desirable on compassionate grounds.

  4. Individual and Group Decisions-

    Individual decisions are those which are taken by a single executive and the group decisions are those which are taken by a group of individuals, a committee or a board. Individual decisions are taken for minor issues at all levels of management since they avoid delay, hesitations and deadlocks, generally associated with group decisions. Group decisions are taken for major issues in order to secure wider cooperation and coordination. Since all the important persons of the group participate in the discussion and express their opinion, the chances of subjective errors are reduced and different points, of view come to light before taking a decision. Moreover, group decisions are more effective in practice as they are based on joint consultation. However, such decisions suffer from unnecessary delays deadlocks and party politics.

  5. Programmed and Non-programmed Decision-

    Professor Herbert Simon has classified all managerial decisions as programmed and non-programmed decisions. He has utilized computer terminology in classifying business decisions. The programmed decisions are the routine and repetitive decisions for which the organization has developed specific processes. Thus, they involve no extra-ordinary judgment, analysis and authority. As such they are basically of a routine type for which systematic procedures have been devised so that the problems may not be treated as a unique case each time when it arises.

On the other hand, the non-programmed decisions are the one-shot ill-structured novel policy decisions, which are handled by general problem-solving process. Thus, they are of extraordinary nature and require a thorough study of the problem and in-depth analysis before solving the problem. So, they are basically of non-repetitive in nature.

  1. Functional Decision:

    Decisions can also be classified on the basis of functions. And as such the decisions may be production and product decisions, financial personnel and marketing decisions.

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