Making a decision is the act of selecting one alternative from a set of alternatives. These can be done either by making a programmed or non-programmed decision. A programmed decision is a decision that is fairly structured or occurs with some frequency. A non-programmed decision is one that is relatively unstructured and often occurs less than programmed decisions. There is also, as in the case with SBP, group making decisions. Group decision making is the process of arriving at a judgment based upon the feedback of multiple individuals. Such decision making is a key component to the functioning of an organization, because organizational performance involves more than just individual action (Ryan K. Lahti, 2001). This is portrayed through the board meetings and decisions are often made upon all the facts provided. .
The decision making process is a number of steps that require management to recognize and define the nature of the decision situation, then identifying the possible alternatives from which the best alternative will be chosen. After this, the company must then discuss and decide how the alternative will be implemented within the company. The conditions in which these are made are under certainty, risk and uncertainty. (Davidson & Griffin, 2000, p308) .
A state of certainty is a condition where the decision maker will know reasonably well what the alternatives are and what circumstances are associated with each alternative. A state of risk however is a situation in which the availability of each alternative and impending costs and benefits are all coupled with probability estimates. Finally, the state of uncertainty is a condition in which management will not know all the alternatives and the risks associated with each. The level of ambiguity and chances of making a bad decision are lower in a state of certainty rather than a state of risk or uncertainty. These conditions are taken into consideration with the decision models.
