Note on Types of Managerial Decision

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In business undertaking, the manager needs to take different types of decision to support their duties and responsibilities. Decisions are taken at various levels of management. Some of the important types of managerial decisions are as follows:

  • Programmed and Non-programmed Decisions

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    The decisions which are normally repetitive in nature are known as programmed decisions. Normally, these types of decision are taken by the middle and lower level managers. Programmed decisions have very short-term impact. Granting leave to an employee, pricing ordinary customers’ orders, recording office supplies, purchase of materials required in the daily course of action, etc. are some of the examples of programmed decisions. Therefore, we can say that they are related to policy and the rules of the management.

    Non-programmed decisions are opposite of programmed decisions. Decisions, which are non-repetitive in nature is known as non-programmed decisions. These kinds of decisions are taken by top executives. Non-programmed decisions don’t have ready-made course of actions. They have to collect data, analyze them, forecast and prepare strategic plans.

    In conclusion, taking non-programmed decisions are much tougher and challenging than taking programmed decisions.

  • Major and Minor Decisions

    The decisions, which are relatively more important, are known as major and which are less important, are known as minor decisions. The major decisions have long term impact like replacement of men by machine, diversification of existing product line, change the basis of overhead allocation in preparing departmental profit and loss account and so many others which are rare and have no precedents as guides.

    Just opposite of major decisions, minor decisions are those decisions which do not have long range impact. For example, minor decisions are related to storing raw materials.

  • Routine (tactical) and Basic (strategic) Decisions

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    The decisions which are frequently taken to achieve a high degree of efficiency in the ongoing activities are known as routine decisions. These types of decisions are also known as tactical decisions. For example, parking facilities, cafeteria services, deputing employees, etc.

    Basic and strategic decisions are prepared by the top level of management for the formulation of the organizational rules, regulations, programs, etc. It has long term impact in the management. Therefore, much analysis is needed. A small mistake in the basic decisions may be the cause of business failure.

  • Organizational and Personal Decisions

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    Decisions which are related to the policy of the business and affect the organizational functions directly is known as organizational decisions. These types of decisions are taken by the top level management. It has long term impact in the management.

    Personal decisions are taken by an individual for the personal benefits rather than an organizational benefit. It has short term impact. Therefore, much analysis is not needed.

  • Individual and Group Decisions

    If an individual is involved in taking the decision, it is called individual decision. Generally, individual decisions are taken in small business organizations. Similarly, it is also taken when and where the problem is of a routine nature, where the analysis of variable is simple and where definite procedures to deal with the problem already exist.

    Decisions taken in the consent of more than one person is known as group decisions. Decisions taken by the board of directors, shareholders, etc. are some of the examples of a group decision.

  • Policy and Operating Decisions

    Policy decisions are taken by the top level management with the involvement of high-ranking officers and legal advisor to change the organizational rules, regulation, event, and producers. Policy decisions are most important decisions. On the other hand, operating decisions are taken by the operating level of management to perform the day to day activities efficiently and effectively. This type of decisions is taken by a middle or lower level of management. It has short term impact. Therefore, much analysis is not needed.

References:

Pokhrel, Dhurb Raj et.al., Business Studies-XII, Asmita Book Publication, Kathmandu

Poudyal, Santosh Raj et.al., Business Studies-XII, Asmita Book Publication, Kathmandu

Bhandari, Kedar Prasad, Business Studies-XII, Bundipuran Prakashan, Kathmandu

  1. The decisions which are normally repetitive in nature are known as programmed decisions.
  2. The decisions, which are non-repetitive in nature is known as non-programmed decisions.
  3. The decisions, which are relatively more important, are known as major decision.
  4. The decisions, which are less important, are known as minor decisions.
  5. The decisions which are frequently taken to achieve a high degree of efficiency in the ongoing activities are known as routine decisions. 
  6. Decisions which are related to the policy of the business and affect the organizational functions directly is known as organizational decisions.
  7. Decisions taken in the consent of more than one person is known as group decisions.
  8. If an individual is involved in taking the decision, it is called individual decision.
  9. Policy decisions are taken by the top level management with the involvement of high-ranking officers and legal advisor to change the organizational rules, regulation, event, and producers.
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Very Short Questions

  • Programmed and Non-programmed Decisions

    The decisions which are made routine, repetitive, well-structures situations with predetermined decision rules are known as programmed decisions. Normally, these types of decision are taken by the middle and lower level managers. They are related to policy and the rules of the management. Programmed decisions have very short-term impact. Granting leave to an employee, pricing ordinary customers’ orders, recording office supplies, purchase of materials required in the daily course of action, etc. are some of the examples of programmed decisions. 

    Non-programmed decisions are a decision which is non-repetitive in nature is known as non-programmed decisions. These kinds of decisions are taken by top executives. Non-programmed decisions don’t have ready-made courses of actions. The decisions of these problems are situational. They have to collect data, analyze them, forecast and prepare strategic plans. The creation of a marketing strategy for a new service represents an example of a non-programmed decision.
  • Major and Minor Decisions

    The decisions which are relatively more important are known as major. The major decisions have long term impact like replacement of men by machine, diversification of existing product line, change the basis of overhead allocation in preparing departmental profit and loss account and so many others which are rare and have no precedents as guides.

    The decisions which are less important are known as minor decisions. Just opposite of major decisions, minor decisions are those decisions which do not have long range impact. For example, minor decisions are related to storing raw materials.

  • Routine (tactical) and Basic (strategic) Decisions

    The decisions which are related to day to day operations of the organization are known as routine decisions. These types of decisions are also known as tactical decisions. They can be taken quickly and are in repetitive in nature. They don't require much analysis and evaluation. For example, parking facilities, cafeteria services, deputing employees, etc.
      
    Basic and strategic decisions are prepared by the top level of management for the formulation of the organizational rules, regulations, programs, etc. The basic decisions are vital for the survival of the organization. It has long term impact in the management. Therefore, much analysis is needed. A small mistake in the basic decisions may be the cause of business failure.
  • Organizational and Personal Decisions

    Decisions which are related to the policy of the business and affect the organizational functions directly is known as organizational decisions. These types of decisions are taken by the top level management by considering his official authority. It has long term impact in the management.

    Personal decisions are taken by an individual for the personal benefits rather than an organizational benefit. It has short term impact. These decisions are taken n the basis of personal skills, education, experience, knowledge and capacity of the individuals. The examples of personal decisions leave the organization to reduce the work load, etc.

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