TYPES OF DECISION
Followings are some of the important types of decision.
A) Programmed and non-programmed decisions
Programmed decisions
- Programmed decision is fairly structured or they are the decisions meant for issues recurring with some frequency.
- In most cases, they are in the form of policies, rules, and standard procedures.
- They are made in response to repetitive & routine type of problems.
- They are usually made by the middle or lower level managers.
Non-programmed decision
- They are relatively unstructured and occur much less often, i.e. not in a regular basis.
- They are taken to deal with novel, nor-recurring & unstructured problems /situations.
- Such decisions are not readymade decisions but usually it takes time for data gathering, forecasting etc. before such decisions are taken as such decisions demand problem-solving skill, judgment, intuition, and creativity.
- They are taken usually by top executives.
- Peter Drucker calls non-programmed decision as strategic decisions and regards them as truly managerial decision, i.e. capital budgeting decision, mergers, takeover decision.
B) Strategic, tactical operational decisions
Strategic decisions
- They affect either whole organization or more that one division/department.
- They are detrimental to the very success, failure, or survival of a firm.
- They are concerned with strategic goals, corporate policy, etc.
- They are taken by top level management.
- They involve long term perspective.
- They involve substantial resource allocation.
Tactical decisions
- They affect only a particular division or department.
- They are detrimental to the very success, failure, or survival of a department or a section.
- They prescribe goals, policies etc. of a particular division or department.
- They are taken by middle management.
- They involve relatively medium term perspective.
- They are made within the preview of strategic decisions.
Operational decisions
- They tend to be programmed. They tend to be routine and repetitive.
- Lower level managers make such decisions.
- They are taken within the preview of strategic and tactical decisions.
C) Individual and group decisions
Individual decisions
- They are taken by an individual.
- The individual may or may not consult before taking such decisions
- Such decisions are taken usually in smaller organizations.
Group decisions
- Group decisions taken collectively by a group of people. For examples: decisions of BOD, teams, committees, task forces.
- They are usually better as two heads are better than one.
- However, it is time-consuming and group think might occur due to dominance of some influential person in the group. Group think is the tendency of the group members to say “yes” to an influential member’s decision without critically analyzing its pros and cons.