Deciding Class Notes

‭DECIDING‬ I‭n a household, decisions must be made based on judgment. It is necessary that‬ ‭managers have sufficient information about the critical areas to be pursued, success‬ ‭factors and expected opportunities and risks. After a decision one will continue to be‬ ‭forced to form judgments with regard to the business processes to be managed,‬ ‭which in turn requires information about the development of the anticipated and‬ ‭identified new opportunities and risks is necessary.‬ ‭ ecision making is essentially a data processing process that involves weighing‬ D ‭alternatives. This assessment can be made on the basis of measurable and‬ ‭unmeasurable criteria.‬ ‭Immeasurable factors often play a major role in the most important decisions, but it‬ ‭remains important to express the measurable factors as accurately as possible in‬ ‭numbers and use this to calculate the most favorable ratios before including the‬ ‭unmeasurable factors in the decision-making process.‬ ‭ he decision-making process can be supported by a set of programmable‬ T ‭decisions‬ ‭(which have a certain routine character and can therefore be delegated to‬ ‭lower- ranking officials).‬ ‭W orking with computers in particular makes it possible to automate routine‬ ‭decision- making and incorporate them into data processing processes. The‬ ‭same applies to the preparatory calculations for decisions made by‬ ‭management itself. This involves using a 'decision support system'. In‬ ‭addition, 'expert systems' can be applied: these systems are in fact computer‬ ‭programs that are able to contribute to tasks for which many years of‬ ‭training and experience are considered necessary. This is possible 'neutral‬ ‭networks' (computer programs that are modeled on the functioning of the‬ ‭brain) people supporting decisions based on 'learned' knowledge.‬ ‭T he decision process‬ ‭ A Simon distinguishes four phases in a decision process:‬ H ‭-‬ ‭Intelligence activity: becoming aware of the need to make decisions; „Design‬ ‭activity‟:‬ ‭-‬ ‭finding, developing and analyzing possible solutions; Choice activity: choosing a‬ ‭-‬ ‭solution from available solutions;‬ ‭-‬ ‭Review activity: evaluating decisions made in the past.‬ ‭ e encounter the following three dichotomies regarding decision‬ ‭s ituations in‬‭the‬ W ‭literature:‬ ‭-‬ S ‭ tructured versus unstructured decision situations‬ ‭Many authors have addressed aspects of the degree of structure of decision‬ ‭situations and several definitions have been developed in this regard. In‬ ‭general, an unstructured decision situation means a situation that is opaque‬ ‭and unrecognizable in its composition and that is difficult to describe using a‬ ‭model. The structured decision situation, on the other hand, is transparent,‬ ‭recognizable in its composition and can be described by means of a model.‬ ‭-‬ R ‭ outine versus non-routine decision situations‬ ‭Routine are those decision situations in which one can fall back on analogous‬ ‭decision situations; This is not possible in non-routine decision situations.‬ ‭-‬ ‭Situations with the possibility of programmed decisions versus situations without that‬ ‭possibility (non- programmed decisions)‬ ‭ ost‬ ‭c haracteristic‬ ‭of‬ ‭programmable‬ ‭decisions‬ ‭is‬ ‭that‬ ‭the‬ ‭decision‬ ‭maker‬ ‭has‬ M ‭fixed rules‬ ‭and‬ ‭procedures‬ ‭(algorithms)‬ ‭with‬ ‭the‬‭help‬‭of‬‭which‬‭he‬‭makes‬‭decisions.‬‭It‬ ‭c oncerns‬ ‭means‬ ‭for‬ ‭decision-making.‬ ‭Unlike‬‭programmable‬‭decisions,‬‭the‬ ‭decision‬ ‭maker‬ ‭for‬ ‭non-programmable‬ ‭decisions‬‭does‬‭not‬‭have‬‭fixed‬‭rules‬ ‭or procedures‬ ‭A‬ ‭specific‬ ‭problem‬ ‭that‬ ‭organizations‬ ‭are‬ ‭confronted‬ ‭with‬ ‭regarding‬ ‭the‬ ‭decision-making‬‭process‬‭regarding‬‭the‬‭use‬‭of‬‭people‬‭and‬‭resources‬‭concerns‬ ‭the‬ ‭principal-agent‬ ‭problem.‬ ‭This‬ ‭problem‬ ‭arises‬ ‭when‬ ‭the‬ ‭decision-making‬ ‭executives‬‭are‬‭not‬‭the‬‭ones‬‭who‬‭own‬‭the‬‭property‬‭of‬‭those‬‭organizations.‬‭It‬‭is‬‭a‬ ‭discrepancy‬ ‭that‬ ‭occurs‬ ‭in‬ ‭many‬ ‭legal‬ ‭entities.‬ ‭This‬ ‭circumstance‬ ‭entails‬ ‭the‬ ‭danger‬‭that‬‭the‬‭decision-making‬‭process‬‭within‬‭organizations‬‭is‬‭not‬‭always‬‭as‬ ‭rational‬‭as‬‭one‬‭would‬‭wish‬‭and‬‭that‬‭decision-makers‬‭can‬‭also‬‭achieve‬‭their‬‭own‬ ‭goals.‬‭pursue‬‭when‬‭making‬‭decisions.‬‭The‬‭latter‬‭phenomenon‬‭is‬‭also‬‭referred‬‭to‬ ‭as 'goal incongruence'.‬ ‭ n important contribution to the discussion has been made in the Netherlands Corporate‬ A ‭governance‬‭supplied by the Peters Commission. Based‬‭on existing legislation, this‬ ‭committee set up by the Amsterdam Stock Exchange, led by JFM Peters, has made about‬ ‭forty recommendations to increase the influence of investors by, among other things, giving‬ ‭the shareholders' meeting more influence.‬