Decision types in business
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| Decision types in business |
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| See also |
There are various typologies of decision in business. One typology of decisions is related to the functions carried out by individual supervisors. One can speak of decisions concerning: salaries, supplies, marketing or accounting. An important feature of this division is to emphasize the importance of decisions made by the individual managers.
Overall typology of management decision
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Fig.1. Decision types in business
- Programmed - based on custom, procedure, routine
- Non-programmed: too rare to form the appropriate procedure
- Strategic, tactical, operational decision
- Individual decision - based on collective diagnosis, group thinking
Based on management functions typology by Henri Fayol there are following:
- decisions related to planning,
- organizing,
- coordinating, motivating,
- and monitoring, controlling.
It is clear that the division of the decision depends on the particular typology of management functions.
Types of decision making
Following table presents two-dimensional typology of decisions.
| Strategic decisions | Tactical decisions | Operating decisions | |
|---|---|---|---|
| Type of problem | Directions of development for the company | Providing conditions for effective implementation of corporate objectives | Optimizing the use of company resources |
| The essence of the problem | The allocation of global resources, depending on the options provided by the environment | Acquisition, organization and resource development | The use of resources, supervision and control |
| Major decisions | Establishing goals and objectives in the strategy development, change the production profile, new investments, etc. | Determining the structure of authority and responsibility, defining principles of material management, changes in production and marketing, etc. | Determination of current tasks, the allocation of resources for their implementation, inventory optimization, etc. |
| The main objectives | Aims and objectives, strategy of diversification, strategies in the field of finance and administration, selecting methods of development | The organization and structure of information, accountability, resourcing and development, cash, tools and work objects, people | Operational objectives and tasks, organization of production and marketing, process control |
| General characteristics of the decision | Decisions centralized, unique, made from time to time | Decision made for solving conflicts between strategy and execution, to address conflicts between individual goals and objectives of the company | Decentralized decisions, repeatable, large number, varied, often taken |
References
- Bellman, R. E., & Zadeh, L. A. (1970). Decision-making in a fuzzy environment. Management science, 17(4), B-141.
- Cohen, M. S., Freeman, J. T., & Thompson, B. (1998). Critical thinking skills in tactical decision making: A model and a training strategy. Making decisions under stress: Implications for individual and team training, 155-189.
- Eisenhardt, K. M., & Zbaracki, M. J. (1992). Strategic decision making. Strategic management journal, 13(S2), 17-37.
- Janis, I. L., & Mann, L. (1977). Decision making: A psychological analysis of conflict, choice, and commitment. Free Press.
- Kirkwood, C. W. (1996). Strategic decision making. Wadsworth Publ. Co..
- Simon, H. A. (1978). Information-processing theory of human problem solving. Handbook of learning and cognitive processes, 5, 271-295.
- Wynn, M. T., Dumas, M., Fidge, C. J., Ter Hofstede, A. H., & Van Der Aalst, W. M. (2007, September). Business process simulation for operational decision support. In Business Process Management Workshops (p. 66-77). Springer Berlin Heidelberg.
Author: Krzysztof Wozniak
