Unit 4

Decision making is the process of identifying problems and opportunities, develop alternative
solution, select best alternatives and implement it.

It is part of all managers’ job and common core to other functions. For instance:

 Top level management: makes decision on dealing with mission of organization and
its strategies.
 Middle level management: focus on implementing strategies, budgets and resource
allocation.
 First level management: deals with repetitive day to day operations.

Rational Decision-making process

It is believed that major decision-making situations should be an explicit rational process in

which managers (decision makers) chose the best alternatives that can maximize the desired
objectives. Accordingly, this process embodies seven steps. These are:

a. Define the problems

A problem is the difference between the current and desired performance and situation.

Opportunity is a chance, event or occasions that requires a decision to be made.

The criteria mangers use to locate problems:

 Deviations from past performance.

 Deviation from the plan.
 Outside criticism.

b. Identify the limiting or critical factors

Limiting factors are those constraints that rule out certain alternative solutions.

These are: Time, resource/ personnel, money, facilities and equipment.

c. Develop potential alternatives or solutions to the problem

This is the stage in which potential solutions that might resolve the problem or lead to objective
attainment are generated.

d. Analyze the alternatives

The purpose of this step is to decide the relative merits of each of alternatives.

e. Select the best alternatives

It is the real point of decision making a manger selects a strategy to solve a problem and to
achieve predetermined objectives.

f. Implement the solution

The alternatives solution should put in to effect and implemented so as to achieve objectives for
which it is made.

g. Evaluate and control

The final step in decision-making process is to create a control and evaluate system. Ongoing
action need to be monitored. This system should provide feedback on how decision was
implemented

Types of Decisions

• The most common types of decisions are:

 Programmed: are the decision managers make in response to routine and repetition
situation and are labeled as programmed because they are amendable to organizational
established policies, procedures and rules.
 Non-programmed decision-making: are those made by manager in a novel, complex or/
and extremely important problems situations.

The decision-making condition

There are three basic decision-making conditions. These are: certainty, risk and uncertainty.

A. Decision under certainty

• Manger has perfect knowledge; external conditions are identified and
predictable. Alternatives are known with their consequences.
 B. Decision Under Risk
• In which probability can be assigned to the expected outcomes of each
alternatives. Manager knows alternatives but do not know how will work so
he/she faced with dilemma of choosing best alternatives.
C. Decisions under uncertainty
• In a situation to manger is not able to determine the exact odds or probabilities
of potential alternatives available and deal with two many unknown facts.
D. Decision under Ambiguity is by far the most difficult decision situation.
Ambiguity means that the goals to be achieved or the problem to be solved is unclear,
alternatives are difficult to define, and information about outcomes is unavailable.

Decision Making Models

• Classical Model,
• Administrative Model
• Political Model
1. Classical Model: managers are expected to make decisions that are economically
sensible and, in the organization’s, best economic interests.
2. administrative model of decision making describes how managers actually make
decisions in difficult situations, such as those characterized by non-programmed
decisions, uncertainty, and ambiguity.

Managers are unable to make economically rational decisions even if they want to. Because of
the following

• Bounded rationality means that people have limits, or boundaries, on how rational
they can be.
• Satisficing means that decision makers choose the first solution alternative that
satisfies minimal decision criteria.
• Intuition represents a quick apprehension of a decision situation based on past
experience but without conscious thought.
3. Political Model of decision making is useful for making non-programmed decisions
when conditions are uncertain, information is limited, and managers may disagree about
what goals to pursue or what course of action to take.
Managers often engage in coalition building for making complex organizational decisions.

• A coalition is an informal alliance among managers who support a specific

goal.

Decision Making tools

Decision-making tools are instruments, methods, or frameworks used to facilitate the process of
making choices or solving problems.

These tools aim to provide structure, reduce bias, and improve the quality of decisions.

Here are some commonly used decision-making tools:

1. Decision Matrix: A decision matrix is a table that allows you to compare and evaluate
multiple options based on multiple criteria.
This tool helps in systematically evaluating alternatives.
2. Decision Trees: are graphical representations of decisions and their possible
consequences, including chance event outcomes, resource costs, and utility.
3. Pareto Analysis: Pareto analysis, also known as the 80/20 rule, is a technique for
identifying the most important factors among many.
It helps prioritize issues by focusing on the most significant contributors to a problem or
opportunity.
4. SWOT Analysis: SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
It is a strategic planning tool used to identify and understand the internal and external
factors.
5. Cost-Benefit Analysis (CBA): CBA is a systematic approach for evaluating the pros and
cons of a decision by comparing the costs and benefits associated with different
alternatives. It helps in determining whether the benefits of a decision outweigh its costs.
6. Decision Support Systems (DSS): Decision support systems are computer-based tools or
software that assist decision-makers in complex and unstructured decision-making tasks.
DSS typically integrate data, models, and analytical techniques
7. Brainstorming: Brainstorming is a group creativity technique used to generate a large
number of ideas or solutions to a problem. It encourages free thinking and idea
generation without criticism
 8. Scenario Analysis: Scenario analysis involves considering multiple possible future
scenarios and assessing how different decisions would perform under each scenario.
9. Multi-Criteria Decision Analysis (MCDA): MCDA is a decision-making approach that
considers multiple criteria or objectives simultaneously.

It helps decision-makers evaluate alternatives based on various dimensions and preferences,

often using mathematical models or scoring systems.

Problem solving techniques

1.Problem Identification:

A. Define the Problem: Clearly articulate the problem by identifying symptoms, root
causes, and the desired outcome.
B. Ask Questions: Use techniques like the "Five Whys" to delve deeper into the problem's
underlying causes.
C. Gather Information: Collect relevant data, facts, and perspectives to gain a
comprehensive understanding of the problem.
D. Brainstorm: Encourage creative thinking to generate potential problem statements and
explore different angles.

2. Problem Analysis:

i. Root Cause Analysis: Identify the fundamental reasons behind the problem rather than
just addressing its symptoms. Techniques like Ishikawa (fishbone) diagrams can help
visualize causes.
ii. SWOT Analysis: Evaluate the strengths, weaknesses, opportunities, and threats
associated with the problem and its potential solutions.
iii. Prioritize Issues: Use techniques such as Pareto Analysis to prioritize the most critical
factors contributing to the problem.
iv. Systems Thinking: Consider the broader context and interconnectedness of factors
influencing the problem.
3. Solution Development:

a) Generate Options: Brainstorm potential solutions without judgment, encouraging

creativity and diversity of thought.
b) Evaluate Alternatives: Assess each solution against criteria such as feasibility,
effectiveness, cost, and impact.
c) Decision Matrix: Use a decision matrix to compare and rank alternatives based on
predefined criteria.
d) Seek Input: Consult with stakeholders, subject matter experts, or relevant parties to
gather insights and perspectives.

4. Implementation:

I. Action Planning: Develop a detailed plan outlining specific steps, responsibilities,

timelines, and resources required for implementation.
II. Risk Assessment: Anticipate potential obstacles or risks to implementation and develop
contingency plans.
III. Communication: Communicate the solution, its rationale, and implementation plans
clearly to stakeholders to gain buy-in and support.
IV. Monitor and Adapt: Continuously monitor progress, evaluate outcomes, and adjust
implementation strategies as needed to ensure effectiveness and address any emerging
issues.
Unit 5
Managerial Environment
The managerial environment refers to the context in which managers operate and make
decisions within an organization.
It encompasses various factors, both internal and external, that influence managerial
roles and activities.
Here are some key components of the managerial environment:
1. Internal factors: within the managerial environment refer to elements that originate
from within the organization itself. Here are some key internal factors:
• Organizational Structure: The structure can be hierarchical, flat, matrix, or a
combination of these, and it determines how information flows and decisions
are made.
• Corporate Culture: The shared values, beliefs, norms, and behaviors that
define the organization's identity and guide the actions of its employees.
• Resources: The tangible and intangible assets available to the organization,
including financial resources, physical infrastructure, technology, intellectual
property, and human capital.
• Policies and Procedures: The formal rules, guidelines, and protocols
established by the organization to govern various aspects of operations,
including HR policies, financial procedures, quality standards, and safety
regulations.
• Leadership Style: The approach taken by top management in setting
direction, motivating employees, and making decisions
• Workforce Dynamics: The composition, skills, attitudes, and motivations of
the workforce within the organization.
• Technology Infrastructure: The technological systems, tools, and platforms
used to support various business functions and processes.
• Financial Health: The organization's financial performance, stability, and
liquidity.
• Innovation and Adaptability: The organization's ability to innovate, adapt to
change, and stay competitive in dynamic markets.
 • Ethical Climate: Ethics refers to the moral principles, values, and standards
of conduct that guide individual and organizational behavior.
An ethical organizational climate is characterized by a commitment to
integrity, honesty, transparency, fairness, and respect for stakeholders.
2. External factors: within the managerial environment encompass elements that
originate from outside the organization but significantly impact its operations,
strategies, and performance.
Here are some key external factors:
• Economic Conditions: Economic factors such as GDP growth, inflation rates,
interest rates, unemployment levels, and consumer confidence directly
influence consumer spending, investment decisions, and overall market
demand.
• Market Dynamics: Factors related to the industry and market in which the
organization operates, including competition, market size, growth trends,
supply chain dynamics, and regulatory requirements.
• Technological Environment: Rapid advancements in technology, including
digitalization, automation, artificial intelligence, and data analytics, present
both opportunities and threats to organizations.
• Legal and Regulatory Environment: Laws, regulations, and government
policies at the local, national, and international levels shape the operating
environment for organizations.
• Social and Cultural Trends: Socio-cultural factors such as demographic
shifts, changing consumer preferences, lifestyle trends, and cultural norms
influence market demand, product/service preferences, and brand perception.
• Political Environment: Political factors, including government stability,
political ideologies, trade policies, taxation laws, and geopolitical tensions,
can have significant implications for businesses operating domestically and
internationally.
• Environmental Factors: Growing concerns about environmental
sustainability, climate change, and corporate responsibility are shaping
consumer attitudes, regulatory requirements, and market expectations.
 • Globalization and International Trade: Increasing interconnectedness of
global markets, trade liberalization, and cross-border investment present
opportunities for expansion into new markets but also expose organizations to
risks such as currency fluctuations, trade barriers, and geopolitical conflicts.
• Emerging Risks and Disruptions: Emerging risks such as cybersecurity
threats, pandemics, natural disasters, and supply chain disruptions can have
profound impacts on business continuity, operations, and financial
performance.
a. PESTEL Analysis:
PESTEL stands for Political, Economic, Social, Technological, Environmental, and
Legal factors.
b. Competitive Forces (Porter's Five Forces):
Porter's Five Forces framework analyzes competitive intensity and attractiveness
within an industry.
• Threat of new entrants: The ease of entry for new competitors into the
market.
• Bargaining power of buyers: The leverage customers have in negotiating
prices and terms.
• Bargaining power of suppliers: The influence suppliers have on input costs
and supply chain dynamics.
• Threat of substitute products or services: The availability of alternative
solutions that could replace the organization's offerings.
• Intensity of competitive rivalry: The degree of competition among existing
firms in the industry
c. Globalization: refers to the increasing interconnectedness and integration of
economies, cultures, markets, and societies worldwide.
d. Technological Influences:
Rapid technological advancements and digital disruptions are transforming
industries, business models, and consumer behavior.
 Technologies such as artificial intelligence, machine learning, big data analytics,
cloud computing, and the Internet of Things are reshaping operations, products,
and services.

3. The global environment

The global environment refers to the interconnected system of economic, political,
social, cultural, environmental, and technological factors that transcend national
boundaries and shape the operating context for organizations worldwide.
Here are some key aspects of the global environment:
• International Markets: The global environment includes opportunities and
challenges presented by markets outside a company's domestic borders.
• Global Competition: Organizations face competition not only from domestic
rivals but also from international competitors operating in the same industry.
• Trade and Investment: International trade agreements, tariffs, trade barriers,
and investment policies impact the flow of goods, services, and capital across
borders.
• Geopolitical Factors: Political events, conflicts, alliances, and diplomatic
relations among nations can significantly affect global business operations.
• Cultural Diversity: The global environment encompasses diverse cultural
norms, values, languages, and customs across different countries and regions.
• Globalization of Supply Chains: Organizations increasingly rely on global
supply chains to source raw materials, components, and finished goods.
• International Regulations: Organizations operating globally must comply
with a myriad of international regulations, standards, and legal frameworks
governing areas such as trade, finance, intellectual property, labor, and
environmental protection.
• Technological Integration: Advances in information technology,
telecommunications, and digital connectivity have facilitated the integration
of global markets and enabled organizations to conduct business across
borders more efficiently.
 • Sustainability and Corporate Responsibility: The global environment
includes growing concerns about environmental sustainability, social
responsibility, and ethical business practices.
• Emerging Markets and Opportunities: The global environment
encompasses emerging markets with rapidly growing economies, rising
consumer spending, and untapped business opportunities.

4. Stakeholder relationships are crucial for the success and sustainability of any
organization. Stakeholders are individuals, groups, or entities that have an interest or
stake in the organization's activities, decisions, and outcomes.
Here are some key stakeholders and considerations for managing relationships with
them:
Customers:
Employees:
Shareholders/Investors:
Suppliers and Partners:
Community and Society:
Government and Regulatory Bodies:
Unit 6
• Communication management refers to the systematic planning, implementation,
monitoring, and evaluation of communication processes within an organization or
project.
• It involves the strategic coordination of various communication activities to ensure that
messages are effectively transmitted, received, and understood by the intended audience.
• Communication management encompasses both internal communication among
employees and external communication with stakeholders, customers, partners, and the
public.
• It aims to create a cohesive communication framework that supports the organization's
goals, enhances relationships, and promotes a positive reputation.
Key components of communication management include:
• Strategic Planning: Identifying communication objectives, defining target
audiences, and developing messaging strategies aligned with organizational
goals.
• Message Development: Crafting clear, concise, and compelling messages that
convey key information and resonate with the intended audience.
• Channel Selection: Choosing appropriate communication channels and
platforms to reach target audiences effectively, considering factors such as
audience preferences, accessibility, and reach.

• Audience Analysis: Understanding the needs, preferences, and

communication styles of target audiences to tailor messages and channels
accordingly.
• Feedback and Evaluation: Soliciting feedback from stakeholders and
evaluating the effectiveness of communication efforts through metrics,
surveys, and other assessment tools.
 • Crisis Communication: Developing strategies and protocols for effectively
managing communication during crises or emergencies to maintain trust and
credibility.
• Internal Communication: Facilitating communication among employees to
foster collaboration, alignment, and engagement within the organization.
• External Communication: Managing communication with external
stakeholders, including customers, partners, investors, regulators, and the
media, to build relationships and enhance reputation.
Significance of communication in management
• Effective communication is the cornerstone of successful management for several
compelling reasons:
1. Fostering Employee Engagement
Communication creates a sense of belonging and involvement among employees by
keeping them informed about organizational goals, strategies, and initiatives.
2. Aligning Goals:
• Clear communication ensures that all members of the organization understand the
company's vision, mission, and objectives.
3. Facilitating Decision-Making:
•Communication provides the information and insights necessary for informed decision-
making at all levels of the organization.
Communication channel in management
a. Verbal Communication:
 Face-to-Face Meetings
 Telephone Conversations
 Video Conferencing
b. Written Communication:
 Email
 Memos
 Reports
c. Nonverbal Communication
 Body Language
  Visual Aids
d. Digital Communication
 Instant Messaging
 Intranet
 Social Media
e. Formal Communication Channels
 Organizational Hierarchy
 Meetings
f. Informal Communication Channels
 Grapevine
 Watercooler Talks

Communication skills for managers

• Communication skills are essential for managers to effectively convey information, build
relationships, and inspire their teams.

Here are some key communication skills that managers should develop:

1. Active Listening:
2. Clear and Concise Communication:
3. Emotional Intelligence:
4. Assertiveness:
5. Feedback and Coaching:
6. Nonverbal Communication
7. Adaptability
8. Conflict Resolution
9. Presentation Skills
10. Interpersonal Communication

Communication Strategies for Effective Leadership

Effective leadership relies heavily on communication strategies that inspire, motivate,

and align teams toward common goals.
 Here are some communication strategies for effective leadership:

1. Establishing Clear Vision and Goals:

2. Open and Transparent Communication
3. Leading by Example
4. Regular and Consistent Communication
5. Tailoring Communication to the Audience
6. Empowering and Delegating
7. Active Listening and Empathy:
8. Providing Constructive Feedback:
9. Handling Difficult Conversations:
10. Celebrating Successes and Acknowledging Contributions

Overcoming Communication Challenges in Management

• Overcoming communication challenges in management is essential for fostering a

cohesive and productive work environment. Here are some common communication challenges
and strategies to address them:

Cross-Cultural Communication:

• Challenge: Differences in language, customs, and communication styles can lead to

misunderstandings and barriers to effective communication.

• Strategy: Provide cultural sensitivity training to employees and managers to increase

awareness and understanding of diverse cultural norms and practices.

Managing Communication Overload

Challenge: Information overload from emails, meetings, and other communication
channels can overwhelm employees, leading to decreased productivity and burnout.
• Strategy: Implement communication protocols and guidelines to streamline
communication channels and reduce unnecessary messages.
Addressing Communication Barriers:
• Challenge: Barriers such as language barriers, hierarchical structures, and technological
issues can impede effective communication within the organization.
 • Strategy: Provide language support and translation services for employees who speak
different languages.
Remote Communication Challenges:
• Challenge: Remote work arrangements can create challenges in maintaining effective
communication, collaboration, and connection among team members.
• Strategy: Utilize a variety of communication tools and platforms, such as video
conferencing, instant messaging, and project management software, to facilitate real-time
communication and collaboration.
Overcoming Resistance to Change:
• Challenge: Resistance to change can arise when implementing new communication
processes or technologies within the organization.
• Strategy: Communicate the rationale behind the change, emphasizing the benefits and
opportunities it presents for employees and the organization as a whole.
Clarifying Roles and Expectations:
• Challenge: Ambiguity around roles, responsibilities, and expectations can lead to
confusion and inefficiencies in communication.
• Strategy: Clearly define roles, responsibilities, and expectations for each team member,
and communicate them regularly.
 MANAGEMENT FUNCTIONS
MANAGEMENT FUNCTIONS REFER TO THE FUNDAMENTAL ACTIVITIES THAT
MANAGERS PERFORM IN ORGANIZATIONS TO ACHIEVE ORGANIZATIONAL GOALS AND
ENSURE EFFECTIVE AND EFFICIENT OPERATIONS.
PLANNING IS THE FIRST MANAGERIAL FUNCTION THAT ALL MANAGERS
PERFORM AT DIFFERENT LEVELS.

Planning is preparing today for tomorrow; planning answers six basic questions in any
intended activity:
What, when, where, who, how, what resource
Importance of Planning
 It provides direction and sense of purpose
 Reduces uncertainty and anticipates the future
 Provides a basis for controlling
 Promotes efficiency
 Provides the base for cooperative coordinated efforts
 Developing managers
 Provides guideline for decision making
Types of Plans
 Scope/breadth dimension,
 Use/repetitiveness, and
 Time dimension
Based on scope we can classify plans into:
 strategic: determine the major objectives of an organization
 tactical: are the means to achieve strategic plans
 operational: are concerned with the day-to-day activities
Based on use dimension
Single-Use Plans: focus on relatively unique situations
Standing-Use Plans: plans which remain roughly the same for a long period
of time
Plans Based on Time Dimension
 Long-term Plans
Medium-term Plans
Short-term Plans

planning Process
a. Establishing Clear-cut Objectives
b. The Planning Premises and Constraints
c. Identifying Alternative Courses of Action:
d. Evaluation of Alternative Courses of Action
e. Choosing the Proposed Plan
f. Arranging Detailed Sequence and Timing for the Proposed Plan
g. Numbering Plans by Making Budgets
h. Implementing the Plan into Action
i. Monitoring and Evaluating the Implementation
Characteristics of Good Planning
 Objective
 Futurity
 Flexibility
 Stability
 Comprehensive
 Simplicity and clarity
Organizing is the process of defining and grouping the activities.
Types of Organizational Structures
 Functional Structure
 Divisional Structure
 Matrix Structure
 Tall Structure