What are the types of decisions?


Although there are various ways of categorizing decision making in an organization but we will discuss here the following types of decisions which are important ones:-

1. Tactical and Strategic Decisions

Tactical decisions are those which a manager takes over and over again following to certain established directions, organizations policies and procedures. These types of decision are repetitive in nature and which are related to general operational nature. Here one point should be noted that the authority who are taking tactical decisions is usually delegated these decisions to lower levels in the organization.

In other words, tactical decisions are relating to the present issues or problems what organizations are facing. The main purpose of tactical decisions is to achieve a high degree of efficiency. Improved working conditions, to make effective supervision, sensible use of existing resources etc.

Now let’s discuss about Strategic decisions, these types of decisions are comparatively more difficult. These types of decision influence the future of the business and its include the entire organization. Decisions relating to the objective of the business, we can take the example which came under the strategic decision i.e. capital expenditure, plant layout, decisions relating to product variation or product line, pricing strategy, advertising strategy, etc.

2. Programmed and Non-programmed Decisions

Prof. Herbert Simon an American economist and psychologist has used computer terminology in categorizing business decisions which we can categorize as the programmed decisions. These decisions are routine and repetitive. We can say that the programmed decisions are basically of a routine type and repetitive in nature which systematic procedures we have developed so that the problem may not be considered as an exceptional case each time.

Now let’s talked about the non-programmed decisions are complex in nature and these types of decisions may deserve a specific treatment. For example, if all the lecturers in a department stop their teaching work, the problem cannot be solved by setting up procedural rules. It would become a problem that needs a systematic study of the grounds of such a situation and after analyzing all issues then we can find a solution through the problem-solving process.

3. Organizational and Personal Decisions

Those decisions made to encourage the benefits of the organization. They are made by executives in their official capacities. They may be strategic, operational, tactical, programmed, etc. 

It takes these decisions in terms of individual practice and rational judgment. Some types of decisions are others, and it cannot delegate some to others. But they influence the functioning of an organization.

 4. Policy and Operating Decisions

Policy decisions are the most important decision when these decisions are going to implement than the whole the procedure, planning and making the strategy of the organization will change and these types of decision are taken by the management committee and these types of decisions are affecting the whole business.  

On the other hand, Operating decisions are just the opposite of Policy decisions, it is including those types of decision which are taken by lower management or it can be said that local management committee for execution policy decisions.

5. Policy, Administrative and Executive Decisions

Ernest Dale was German-born American organizational theorist who has classified decisions in the business organization which as under.

(a) Policy decisions,

(b) Administrative decisions and

(c) Executive decisions.

Policy decisions are taken by top management or management committee which we have already discussed above mostly we relate them on the major issues which are faced by a business organization, which may be a financial structure, marketing policies, and organization structure.

Administrative decisions are made by middle management or local management committee.

According to Ernest Dale

The size of the advertising budget is a policy decision, but the selection of media would be an example of administrative decision.

Executive decisions are those which are made for the execution of policy which has been decided by top management.

Now here the question has arisen how to characteristic among these three types of decisions

Ernest Dale writes, 

Policy decisions set forth goals and general courses of action, administrative decisions determine the means to be used and executive decisions are those made on a day-to-day basis as particular cases come up.

So, That is all from my side if you like this post please share it with your friends on Whatsapp, Facebook, Twitter for just forward with them.

Happy Readings!!

Nadeem Khan
M.Com, MBA
Email - ndmk1338@gmail.com

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