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Showing posts with the label DECISION MAKING

Single Entry and Double Entry Accounting

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Single entry accounting/Cash accounting. This system records only cash movement of transactions and that too up to the extent of recording one aspect of the transactions. This means that only receipt or payment of cash is recorded and no separate record is maintained (about the source of receipt and payment) as to from whom the cash was received or to whom it was paid. Double entry book keeping/Commercial accounting. Double entry or commercial accounting system records both aspects of transaction i.e. receipt or payment and source of receipt or payment. It also records credit transactions i.e. recording of Electricity Bill or accruals of Salary payment etc. This concept will be explained in detail in the next lectures but for the time being it should be noted that in cash accounting date of receipt / payment of actual cash is important while in commercial accounting the date on which the expense is caused (whether paid or not) as well as the spreading of the cost of c...
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GROUP DECISION MAKING AND CREATIVITY

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The Creativity Factor in Decision Making Innovation and creativity is important to organizational success in the marketplace.   Creativity versus Innovation There is a difference between creativity and innovation. 1.  Creativity is the ability to combine ideas in a unique way or to make unusual associations between ideas. 2.  Innovation is the process of taking a creative idea and turning it into a useful product, service, or method of operation. Creativity is the cognitive process of developing an idea, concept, commodity, or discovery that is viewed as novel by its creator or a target audience. A.   Creativity requires both convergent and divergent thinking. 1.  Convergent thinking is the effort to solve problems by beginning with a problem and attempting to move logically to a solution. 2.  Divergent thinking is the effort to solve problems by generating new ways of viewing a problem and seeking novel alternatives. B.   Creativity has...
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RATIONAL DECISION MAKING

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Managers as Decision Makers: Although we know about the decision-making process, we still don’t know much about the manager as a decision maker. In this session, we’ll look at how decisions are made, the types of problems and decisions managers face, the conditions under which managers make decisions, and decision-making styles. The nature of managerial decision making: Decision making is the process through which managers identify organizational problems and attempt to resolve them. Decision makers face three types of problems. 1.  A crisis problem is a serious difficulty requiring immediate action. 2.  A non-crisis problem is an issue that requires resolution, but does not simultaneously have the importance and immediacy characteristics of crises. 3.  An opportunity problem is a situation that offers a strong potential for significant organizational gain if appropriate actions are taken. a.  Opportunities involve ideas that could be sued, rather than d...
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NON RATIONAL DECISION MAKING

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Non Rational Model: The non-rational models of managerial decision making suggests that information-gathering and processing limitations make it difficult for managers to make optimal decisions. 1.  The Satisficing Model, developed in the 1950s by Nobel Prize winner economist Herbert Simon, holds that managers seek alternatives only until they find one that looks satisfactory, rather than seeking the optimal decision. a.  Bounded rationality means that the ability of managers tobe perfectly rational in making decisions is limited by such factors as cognitive capacity and time constraints. b.  Actual decision making is not perfectly rational because of 1)  Inadequate information 2)  Time an cost factors 3)  The decision maker’s own misperceptions or prejudices 4)  Limited human memory 5)  Limited human data-processing abilities. Satisficing can be appropriate when the cost of delaying a decision or searching for a better alternative outwe...
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NATURE AND TYPES OF MANAGERIAL DECISIONS

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Nature of Managerial Decision-making: Decision making is the act of choosing one alternative from among a set of alternatives. There are two types of decisions. Programmed decisions are those made in routine, repetitive, well-structured situations through the use of predetermined decision rules.   Many programmed decisions are derived from established practices and procedures or habit. Computers are an ideal tool for dealing with several kinds of complex programmed decisions. Most of the decisions made by first-line managers and many by middle managers are programmed decisions.  Non-programmed decisions are those for which predetermined decision rules are impractical because the situations are novel and/or ill-structured. Types of Problems and Decisions: Managers will be faced with different types of problems and will use different types of decisions. Another dimension of problem is its structure. A problem can be well-structured or poorly structured. 1.  W...
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DECISION MAKING AND DECISION TAKING

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Intelligent computer software is helping managers and other decision makers to be more effective and efficient. Several diverse industries such as energy, health care, transportation, and telecommunications are relying on applied intelligence software to help make decisions by computers that were previously left to humans. Can any thingever replace the decision-making process utilized by humans? In this session, we’ll look at the decision making process and see that there is nothing that will ever replace the manager’s need to make decisions. Making good decisions is something that every manager strives to do because the overall quality of managerial decisions has a major influence on organizational success or failure. Decision making is part of all four managerial functions. In performing these functions, managers are often called decision makers. The Decision-Making Process: A decision is a choice made from two or more alternatives. The decision-making processis defined as a se...
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BASIC CONCEPTS OF ACCOUNTING

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Financial accounting is the maintenance of daily record of All financial transactions in such a manner that it would help in the preparation of suitable information regarding the financial affairs of a business or an individual. The need for recording financial transactions arises because the individual or business wants to know the  performance of the business and to assist the person in making decisions related to the business. Transactions In accounting or business terms, any dealing between two persons involving money or a valuable thing is called transaction .   Human beings are social animals and are bound to adopt a community living style. Living in a community, essentially means that people interact with other people and are dependent on each other to fulfill their needs. Every person cannot fulfill all his needs like food, clothing, housing etc. on his own. He, therefore, depends on other people for his needs, in return to this providing others with some of t...
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RECORD KEEPING AND SOME BASIC CONCEPTS

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We can maintain a diary of transactions and note the daily transactions like sale, purchase etc. in it. Problems Faced in Maintaining Diary of Transactions • How will we come to know the income and expenses from various sources? • We only have a sheet / page on which daily transactions are listed. • We do not know which product is selling better and which is not. Available Alternate One can go through all the transactions at the end of the month and note different types of transactions on different pages. So that every page gives complete detail for a different type of transaction like sales of different products and expenses of different types now try to go through these transactions and separate transactions of different types.   But what if the number of transactions is large? Is it really possible to go through hundreds or thousands of transactions at the month end and analyse them to obtain required results.  Sales and purchase are not always for cash...
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STRATEGIC HUMAN RESOURCE MANAGEMENT

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Once a company decides how it will compete, it turns to formulating functional departmental strategies to support its competitive aims. One of those departments is human resource management. Its functional strategies are  human resource management strategies. Defining Strategic Human Resource Management Every company needs its human resource management policies and activities to make sense in terms of its broad strategic aims. Strategic human resource management means formulating and executing human resource policies and practices that produce the employee competencies and behaviors the company needs to achieve its strategic aims. Figure shows the link between human resource strategy and the company s strategic plans. The basic idea behind strategic human resource management is this: In formu-lating human resource management policies and activities, the aim must be to produce the employee skills and behaviors that the company needs to achieve its strategic goals. Figure ...
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