types of decision making

Decision-making plays a critical role in any type of organization, whether small or big. Because the entire future of the company depends on its today’s decision. In this article, we are going to talk about the types of decision making, with the help of which you will be able to know which decision you should take in which situation.

Table of Contents

1) Routine decision

Routine decisions are decisions that organizations take on a daily basis. It requires less member involvement while making decisions and these decisions are often consistent across an organization. Along with this it does not require much time for research and requires only less investment.

For example- Inventory decision making are routine based decisions. In inventory decision the organization decides the quantity of inventory to be ordered. Organizations take this decision on a daily basis as new lists come and go every day.

2) Strategic decision

Strategic decisions are those decisions which are taken by the top level of the organization as it requires very deep knowledge and high thinking mindset. Organization always focus on only one goal and put all its efforts to achieve that goal hence it is known as strategic decision because organization makes strategy to achieve a goal. This decision focus on long term goal of organization.

For example- Company A wants to expand its business for more profit. For this he wants to buy a place. Now, the company needs to make proper strategy to buy the right place to get more profit.

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3) Programmed decision

Programmed decisions are a type of decisions that are made only once when a problem arises in the organization. After that the people of the organization follow the same decision when the same problem comes again.

For example- Organizations never make new decisions every time they recruit new people. They always follow the same decision and process at the time of recruitment in the organization. Therefore, the decisions related to the recruitment of new people in the organization are programmed decisions.

4) Non-Programmed decision

Non-programmed decisions are made for those types of problems that arise suddenly in organizations. Typically, these decisions deal with unique and unusual problems. There is no set procedure and formula to solve the problem in the company. The company needs to take quick decisions when unforeseen problems arise in the organization.

For example- Employees of a company supply perishable materials to stores without the knowledge of the company. All the shopkeepers want to return the supply as the goods are defective. This is a sudden problem that arises in the company because all the shopkeepers suddenly want to return their goods to the company. In this unforeseen situation, the company needs to take quick decision to solve the problem otherwise the shopkeepers will change their company.

5) Policy decision

Usually, policy decisions are made for the internal activities of the organization. In policy decision, the organization makes policies about what they will do, how they will do it. These decisions are future based decisions and are long lasting in the organization.

For example- The policy decision of the cloth making company will be that from where they will import the raw material, where will they keep the raw material, how will the employees of the company make the cloth from the raw material, what will be the design of the cloth, which type of machinery will be used to make the cloths, what will be the working time of the workers of the company. All these are the policy decisions of an organization which are related to the internal activities of the organization.

6) Administrative decision

Administrative decisions are the decisions that are made by the managers about how they will apply the rules and policies made by the top-level management to the workers under them. These types of decisions are made for a particular group of people. The organization follows administrative decisions so that company rules and regulations can be applied peacefully in the organization.

For example- The decisions taken by the government are implemented by the administrative people like IAS, IPS, IFS, etc. in the country. Decisions regarding how to implement government decisions in their areas are administrative decisions taken by intermediaries.

Administrative decisions are made for a particular group of people. For example- If the government will make a policy related to the specific area of the country, then the notice of implementing the scheme will go to the IAS. If the government makes a policy related to other countries, then the notice to implement the scheme will go to the IFS.

7) Executive decision

Executive decisions are small decisions that are taken by the lower levers of the management when they need something while doing their job.

For example- Calling maintenance department to repair machinery.

8) Individual decision

As the name suggests, individual decisions are taken by an individual in the organization. These types of decisions are taken by those who have some share of authority (power) to make decisions in the company. This right is given by the company.

For example- The CEO of a company delegates some of his responsibility and authority to a member in the organization. Now, the individual has the power to take decisions based on his authority and responsibility.

9) Group decision

Group decision-making is a participatory process where several individuals work together to analyze a problem and find a perfect solution to that problem.

For example- All the decisions related to recruitment are taken by the group members of the Recruitment Committee.