Types of decisions

Types of decisions

1. Programmed and non-programmed decision

   • Programmed decisions deal with problems that are familiar and where the information required to make them is easy to define and obtain. The situation is well structured and there are often established procedures, rules and policies
   • Non-programmed decisions deal with situations that are unstructured and require a unique solution. These are unusual decisions that may be risky, such as a major investment or entering a new market

2. Tatical and strategic decisions

   • Some decisions are strategic, meaning that they are long term, involve a major commitment of resources amnd are diffiuclt to reverse
   • Tactical decisions are short term, taken more regularly and involve fewer resources.

3. Decision making, risks, rewards and uncertainty

   • Most decisions taken by managers involve some degree of risk. Risk is normally measurable. For example when considering a price cut, it may be possible to research the buying habits of the targeted consumer group to assess the possibility of this happening
     • This situation illustrates how gathering more data relating to a decision can help to deduce the risk
   • Some types of decisions are unique and involve situations that managers have not experienced before. Accordingly, it's difficult to identify every single possible outcome and even harder to establish the probability of each of these outcomes.
     • This makes it very difficult to assess the degree of risk and the likelihood of incurring some loss or misfortune. This creates uncertainty