Question

Describe the steps involved in the managerial decision-making process and discuss two important decision-making techniques used by managers. How can Management by Objectives (MBO) support effective decision making and performance management in organisations?

27 Jan 2026
Answer :
Word Count : 1070
Decision making is a core function of management and forms the basis of planning, organising, directing and controlling organisational activities. A managerial decision refers to a conscious and rational choice among available alternatives to achieve desired objectives. The decision-making process is systematic and involves a series of interrelated steps that help managers arrive at effective and timely decisions. The first step in the managerial decision-making process is the identification and definition of the problem. A problem arises when there is a gap between the existing situation and the desired state of affairs. Managers must clearly recognise and define the real problem rather than its symptoms. Accurate problem identification is crucial because a wrongly defined problem can lead to inappropriate decisions. Managers collect preliminary information, observe deviations in performance, and analyse internal and external conditions to understand the nature and scope of the problem. The second step is the collection and analysis of relevant information. Once the problem is identified, managers gather relevant data related to the problem. This includes information about organisational resources, constraints, environmental factors, market conditions, and stakeholder expectations. The information collected must be accurate, timely, and relevant. After collecting data, managers analyse it to identify causes, trends, and possible implications. This step reduces uncertainty and provides a factual basis for decision making. The third step involves the development of alternative courses of action. Managers formulate possible solutions or alternatives that can address the problem. Creativity and innovative thinking play an important role at this stage. Alternatives should be realistic, feasible, and aligned with organisational goals. Managers may consult experts, involve team members, or use past
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