Decision types in business
From CEOpedia | Management online
| Decision types in business |
|---|
| 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
- 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.
Fig.1. Decision types in business
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
