1. Projekt Anglicky v odborných předmětech, CZ.1.07/1.3.09/04.0002
Anglicky v odborných předmětech "Support of teaching technical subjects in English“
Tutorial: Business Academy
Topic: Decision-making process
Prepared by: Ing. Adéla Hrabcová
Projekt Anglicky v odborných předmětech, CZ.1.07/1.3.09/
je spolufinancován Evropským sociálním fondem a státním rozpočtem České republiky.

2. Managerial function decision-making
Decision-making is one of the most important managerial activities. Incorrect decision can be (and often it is) a cause of business failure.
Decision-making process = a choice between at least two alternatives – decision- making options. The aim is to select the optimal alternative that brings the highest benefit.

3. Elements of a decision-making process
Objective – a future state that should be reached by implementing the chosen option
Decision-making subject – the decision-maker – it can be an individual or a group of people
Decision-making object – the subject of decision – ‚what‘ is important to decide
Criteria for decision-making – perspectives that are important for suitability of various options
Variant – a possible way of negotiation that should lead to the problem

4. Types of criteria
costs – the lower is the value of criteria, the better it is (e.g. costs, losses)
revenues – the higher is the value of criteria, the better it is (e.g. power, profit, lifetime, etc.)

5. Types of decision problems
Well-structured problems – routine, recurring problems (situation), the decision is usually based on the known procedure and there is enough information concerning the problem (e.g. In a shop a customer complains about some products and the salesman knows exactly how to proceed this situation)
Poorly-structured problems– new, unusual problems that have not been solved by the manager so far. Manager does not have enough information; therefore, the decision is more difficult (e.g. To decide whether to invest in a technology…)

6. Types of decision problems according to the level of management
Levels of management Type of a problem
Top management poorly
structured
Middle management poorly and well
structured
Operative management well
structured

7. Conditions for decision making
Certainty – complete information is available - we predict upcoming situation - we know the consequences of variations Risk – we can only estimate the consequence - we do not know exactly what condition occurs - we can determine the probability of variations Uncertainty – we do not know the effects of variations - we cannot predict the consequences - we do not know the probability

8. General decision making process
Identification of the decision problem
Analysis of the decision problem
Determination of criteria
Variant creation
Variant evaluation according to criteria
Selection of the best variant
Implementation of the selected variants
Results monitoring

9. Some of the decision making methods
Brainstorming – a modern method that is used when making decisions in the group. It supports creativity and brings new ideas and solutions. The aim is to get or express as many ideas and thoughts as possible. All of the ideas are written down and then the best idea is chosen. Nobody should criticize and evaluate ideas of others. Brainwriting – a written form of brainstorming

10. Some of the decision making methods
Decision-making trees– graphical tools for decision making that enables to illustrate the process of decisions and situations. The aim is to find an optimal strategy. Examples of decision-making trees:

11. Questions Decide whether it is a well or a poorly structured problem:
A company deals with an idea to enter the Asian market
Poorly structured
A company wants to make a decision whether to produce a new type of product
An employee deals with an idea how much material to order
Well structured
A foreman wants to make a decision which worker will be assigned to a particular task

12. Exercise
Try to determine criteria that would be crucial when making following decisions:
a selection of a foreign tour
a purchase of a washing machine
a selection of a secondary school
a purchase of a car

13. Bibliography
VEBER, J., et al. Management: základy, moderní manažerské přístupy, výkonnost a prosperita. Praha: Management Press, ISBN
VEBER, Jaromír, DĚDINA, Jiří, HRŮZOVÁ, Helena, KOŘENÁŘ, Václav, MALÝ, Milan, SRPOVÁ, Jitka. Příklady z managementu a jejich řešení. 1. vyd. Praha : Fortuna, ISBN
SYNEK, Miloslav, and Eva Kislingerová. Podniková Ekonomika. 5., přeprac. a dopl. vyd. Praha: C.H. Beck, ISBN