Here is a compilation of term papers on ‘Decision Making’ for class 11 and 12. Find paragraphs, long and short term papers on ‘Decision Making’ especially written for school and college students.

Term Paper on Decision Making

Term Paper Contents:

  1. Term Paper on the Introduction to Decision Making
  2. Term Paper on the Definition of Decision Making
  3. Term Paper on the Features of Decision Making
  4. Term Paper on the Classification of Decisions
  5. Term Paper on the Steps in Decision Making
  6. Term Paper on the Factors Influencing Decision Making
  7. Term Paper on the Theories of Decision Making
  8. Term Paper on the Modern Approaches to Decision Making

Term Paper # 1. Introduction to Decision Making:

Decision making is the essence of management. No executive can do anything unless he decides something. An executive is considered as always decisive and always takes quick decisions in the best interest of the organisation. Sound decision making is considered as the outstanding characteristic of a successful manager. Management and decision making go together.


Decision making is a part of planning and the success of planning depends on sound decision making. Manager is to take decisions at every stage of business. Decision making involves choosing a course of action from alternative courses of action available to him in solving a problem. The manager’s job is to decide and choose the best course of action. It is the very important function.

Decision making is a human process. A manager decides what he thinks to be the best among all the alternatives. So decision making is a blend of thinking, deciding and acting. For a rational and sound decision he has to collect facts and analyse the worth of all the alternatives available, and then chooses the best.

Decision making is a universal problem. This is taken at all levels of the organisation. Only the nature and scope of decisions differ from one level to another. This is applicable to all organisations, business or non-business, small or big, located in the rural or urban area.

Decision making is also a managerial process and it involves the establishment of goals, defining tasks, search for alternatives, analyse the alternatives and choose the best one in a given situation. To decide means cut off or come to a conclusion.

Term Paper # 2. Definition of Decision Making:


Decision making is a process. It consists of activities a manager performs to come to a conclusion. It is a conscious and a human process. It is applicable to all levels of management and all types of organisation.

It is to analyse the course of a problem, develop alternatives to the problem and the manager is to choose a particular course of action which he considers to be the best in the present circumstances. Some of the definition of authorities is quoted to have better understanding.

Koontz and O’Donnell define “Decision making—the selection from among alternatives of a course of action—is at the core of planning.”

Louis. A. Allen defines decision making as “the work a manager performs to arrive at conclusions and judgement.”


George R.Terry defines, “decision making is the selection based on some criteria from two or more possible alternatives.”

Dalton E. McFarland defines, “A decision is an act of choice wherein an executive forms a conclusion about what must be done in a given situation. A decision represents a behaviour chosen from a number of possible alternatives.”

So decision making is a process of selection from a set of alternative courses of action which is thought to fulfill the objectives of the decision problem more satisfactorily than others. A decision making is an act of choice wherein a manager selects a particular course of action from the available alternatives in a given situation. It involves the process of establishing goals, defining tasks, searching for alternatives, and developing plans in order to find the best answer to the decision problem.

Term Paper # 3. Features of Decision Making:

The features of decision making are as follows:


(a) It is a selective process as it is a process of choosing a course of action from among the alternatives. Decision making is not involved if there is only one alternative to the problem.

(b) It is a human and rational process involving to a great extent the application of intellectual abilities. It involves deep thinking and foreseeing things. But decision cannot be completely quantified. Many decisions are based on institution and instincts. Systematic analysis of pertinent facts is not always possible.

(c) Decision making is a dynamic process. It involves a time dimension and time lag. A particular problem may have different decisions at different times depending on the situation. Thus, decision making is situational.

(d) It is the end process proceeded by deliberation and reasoning.


(e) It always related to the environment. The decision taken will always be in perfect co-relation with the environment. A change in environment may affect the decision for the problem.

(f) Decision making is goal oriented process. Decisions are made to achieve certain desired goals or objectives.

(g) It implies freedom to the decision maker regarding the final choice. It also involves commitment of resources in specified ways.

(h) It is a continuous process. A manager has to take a number of decisions and managerial job is perpetually a decision making exercise.


(i) Decisions may be positive i.e. for doing a thing or may be negative for not doing a thing.

(j) It involves all actions like defining the problem, probing and analysing the various alternatives which take place before a final choice is made.

Term Paper # 4. Classification of Decisions:

Decisions are classified according to different bases. They are:

(a) Nature:


According to the nature the decisions may be classified as Routine and strategic decisions. A routine decision is also known as tactical decisions. These decisions are made repetitively on the basis of rules, procedures and policies. Decisions can be taken without much deliberation. They may be complicated but are always one-dimensional. These decisions can be taken at any level of management.

Strategic decisions are also known as basic decisions. These are generally taken by the top and middle managements. They relate to policy matters and they require a thorough fact finding and analysis of alternatives. The identification of correct problem in such decisions assumes great importance.

(b) Level of Management:

Some decisions are taken by the top management and some are taken at the lower level. Decisions relating to policies affect the enterprise. They are known as policy decisions. Example: Granting of Bonus to employees and fixing its quantum.

Operating decisions are taken by the lower management in order to implement policy decisions. Example: The calculation of the amount of bonus payable to employees.

(c) Capacity:


On the basis of capacity with which decisions are taken they are classified as organisational and personal decisions. Where a manager takes a decision in his official capacity it is known as organisational decision. Such decisions can be delegated.

Decisions taken by a manager as an individual and not as a member of the organization are is a personal decision. It cannot be delegated.

(d) Programme:

Decisions are classified as programmed and non- programmed decisions. Programmed decisions are of routine and repetitive nature. They are to be dealt with according to specific procedures. Example: An employee is absenting himself for a long time without proper intimation. The immediate superior is to deal with it without informing chief executives. In every organisation there are well established standard procedures which are to be followed to deal with cases of this type. They are well established and structured.

Non-Programmed decisions arise because of unstructured problems. There is no standard procedure for handling such problems. They require the study of the problem thoroughly and scientific analysis of situational factors is to be made. Adequate probing and analysis of various alternatives before taking such decisions. Example: Large number of employees absent themselves from work without any information such a problem cannot be dealt in a routine manner. This is an unstructured problem and it has to be dealt by the chief executive.

(e) Individual and Group decisions:


Decision taken by an individual in the organisation is called as individual decision. This is possible in small organisations and where autocratic style of management prevails.

Group decisions are those which are taken by a group i.e. by a Committee, Board of Directors. It is also known as collective decisions.

Term Paper # 5. Steps in Decision Making:

Decision making is an indispensable component of management process. Managers have to make simple as well as complex decisions. Decision making is not so easy. It requires skill that cuts everything managers do. Every decision is a dynamic process which is influenced by multiple forces. Generally a process is a dynamic concept. Events and relationship are dynamic, continuous and flexible. They are to be considered as a whole in which many forces interact.

A manager can make decisions by intuition i.e. without considering alternatives decides as per the dictates of his mind. Further he feels that the particular course of action is the best. There is no logic behind it. Decisions based on intuition are subjective and are taken without any conscious effort to weigh the merits and demerits of various alternatives.

Effective decision-making requires a rational choice of a course of action. The term rational is to be defined. Rationality is the ability to follow a systematical, logical, through approach in decision making. Thus if a decision is taken after thorough analysis and reasoning and weighing the consequences of various alternatives, such a decision will be called an objective or rational decision. In reality manager’s decisions involve a combination of intuition and rational thinking.

So on the basis of rationality decisions classified into two types known as subjective and objective decisions. A subjective decision relies more on intuition and an objective decision relies more on logical thinking. In this connection Herbert Simon has proposed the theory of “bounded rationality”. This means the managers making the most logical decisions they can within the constraints of limited information and ability.


Rationality requires complete knowledge of the consequences that will follow each choice. But it is not always possible. Rationality further requires a choice among all possible alternatives. But individuals do have their limitations. A man cannot be said to be completely rational.

As pointed out by Simon a man is only bounded by rationality. This helps us in understanding the actual behaviour of the decision maker. Subjective factors are bound to affect a person’s decisions even though he is otherwise rational.

The steps in decision making process can be explained by going through the following steps:

1. Problem Identification

2. Diagnosing the problem

3. Development alternatives


4. Analysis and evaluation of alternatives

5. Selection of the best alternatives

6. Implementation of decision

7. Follow up

1. Problem Identification:

The first step in decision making is problem identification which means to recognize what the real problem is. Problems generally arise because of disparity between what is and what should be. The threats and environmental changes may also create decision problem.


In this step the manager is to identify and define the real problem in a straight way rather than finding a solution to the problem. A problem well defined is half solved. There may be multiple causes for an organisational problem and the manager has to identify it which is really not an easy task.

Some managers may rely on systematic diagnosis of a problem. But if the symptoms are not the real indicators of the problem then the problem identification becomes useless. So to identify a problem the manager must continuously monitor the decision making environment, understand the possible courses of the problem and to define it properly.

For doing so he can rely on management reports, progress with budgets, compare the results against ideas by competitors, and assess the efficiency of employees. Last but not the least managers have to make use of imagination, experience and judgement in order to identify the exact nature of the problem.

2. Diagnosing the Problem:

In this step the manager is to know the real cause of the problem or the contributing factors of the problem. The problem should be well understood in terms of its elements. Its magnitude, its urgency, its courses and its relations with other problems.

The manager is to diagnose the problem quickly and correctly and they are to collect and analyze the problem. The manager is to find out the real cause or source of the problem. Symptoms of the problem should be considered and analyzed to diagnose the problem.

After diagnosing the problem the manager is to classify the problem and gather information about it.

The problem should be classified in view of the following guidelines:

(i) The nature of the decision whether it is strategic or routine.

(ii) The impact of the decision on the various functions of the business.

(iii) The futurity of the decision.

(iv) The periodicity of the decision.

(v) The limiting factors relevant to the decision.

3. Developing Alternatives:

A complete diagnosis facilitates the manager in knowing the problem and the situation in which the problem exists.

The manager is to search for various alternative solutions to the problem. It is his duty to reach and analyse all possible ways. If there is only one way of solving a problem there is no problem of decision making. Developing a wide range of alternative solutions may increase the freedom of decision makers. It is always advisable for the manager to restrict the alternative solutions only to strategic or critical to the problem.

The manager is to follow the principle of limiting factor. This factor limits the performance in achieving an objective. Those alternatives which are not possible to be achieved are not to be considered. Time and cost constraints should be considered. Developing alternatives is a creative process which requires research and imagination. The decision makers can also rely on their past experience, practices followed by others, and their creative techniques as well.

4. Analysis and Evaluation of Alternatives:

Next step in decision making is to analyse the alternatives. The term analysis means methodical classification of available data. This is attempted with the object of knowing the pros and cons in relation to each other. Only those alternatives with good prospects are to be screened. Screening involves two important approaches.

In the first approach the decision maker is to prepare a list of limits and constraints and applies these constraints on each alternative. Any of the alternatives who do not meet those constraints are totally rejected and the rest are evaluated.

In the second approach various alternatives are grouped into classes on some specific criteria which are important to decision making. The group which shows the best result is selected for future analysis.

In evaluation the factors to be considered are:

(i) The risk involved and the resources available.

(ii) They should be compared in connection with accomplishment of objectives in relation to efforts involved and results expected.

(iii) Tangible and intangible factors are to be considered. Tangible factors are those which can be expressed numerically like sales, profits, money invested, return or investment, time taken. Intangible factors are most qualitative and they cannot be quantified. Example: Reputation of the company, employee morale.

(iv) The decision maker may also face a problem in the ranking decisions wherein two or more alternative solutions appear equally good. In that case, actual difference will be the deciding factor.

(v) Finally in evaluation none of the alternatives found suitable in achieving the expected results than the decision maker is to take a fresh attempt to trace the undiscovered alternatives.

(vi) In the evaluation of alternatives the management should develop certain to suit their requirements.

Peter F. Drucker has suggested the following criteria.

They are:

The degree of risk involved in each alternative.

Cost, time and efforts involved in the alternatives.

The problem is to be dealt with urgently or it is dealt with leisurely.

The resources, physical, financial and human resources available with the organisation and to be committed by each of the alternatives.

5. Selection of Best Alternative:

The next step for the manager is to decide on the best alternative.

This decision is taken by focusing on two aspects:

(i) The alternative should contribute to the achievement of organisational objectives.

(ii) It should maximise the result in the given set of conditions.

The approaches to be in selecting the alternative are:

(i) Experience

(ii) Experimentation

(iii) Research and analysis.

(i) Experience:

Managers can choose the alternative based on their past experience, if they have solved similar problems in the past. But past decisions should not be repeated unless the circumstances are similar. When the environmental factors are more flexible or variable in nature past experience can be of no avail. Past decisions are to be amended taking the present circumstances into account.

(ii) Experimentation:

In this approach there are three stages. They are implementation, observation and analysis. The alternative is put into practice, results are observed and the alternative which shows the best result is chosen. This approach is expensive and time-consuming. This should be used only on a limited scale.

(iii) Research and Analysis:

This is considered as the most effective technique when a major decision is involved. It tries to bring out the relationship between the critical variables, constraints and premises and its impact on objectives to be achieved. The alternative with the one which has the most positive impact on objectives is chosen.

In spite of these approaches available in selecting the best alternative the decision maker’s personal values and aspirations also affect the choice of best alternative.

6. Implementation of Decisions:

Implementation is equally important as the manager is associated with the continuous and ongoing process of decision making unless he comes to know the result of his decision.

Implementation involves the points specified below:

(i) Laying down derivative plans and their communication to those down the line for implementation.

(ii) The language of the decision should be simple and easily understandable.

(iii) Everybody should acknowledge it and their co-operation is sought for implementation.

(iv) Implementation plan is to provide for time and procedure sequence.

(v) Necessary resources should be allocated.

(vi) Responsibility for specific tasks should be assigned to individuals.

7. Follow-Up:

The implementation is to be constantly monitored. The progress should be watched carefully. Deviations are to be corrected immediately.

Decision making permeates all management and covers every part of the enterprise. The steps discussed above are not necessarily taken in arriving at all decisions. The organisation may develop a policy, a procedure or specific rule to handle a particular type of problem then it is not necessary to develop and evaluate various alternatives each time the problem arises.

Finally, to quote John McDonald who has stressed the importance of decision making and the glorious task which an executive performs. “The business executive is by profession a decision-maker. Uncertainty is his opponent and overcoming it is his mission. Whether the outcome is a consequence of luck or wisdom, the moment of decision is without doubt the creative event in the life of executive”.

Limits on Rationality of Decisions:

It is difficult to achieve complete rationality in decision making due to the following reasons:

(a) A decision is always connected with the future and its outcome always takes place in some future period. Future is full of uncertainties which cannot be predicted with cent per cent accuracy.

(b) Decisions are made to achieve some goals. Goals cannot always be defined specifically. There is always a possibility for vagueness, conflict or change in goals. So based on goals decisions will also suffer.

(c) The various alternatives of reaching goals may not be known to managers due to limitations regarding data collection. So cent per cent rationality cannot be achieved.

(d) There is a lack of complete knowledge regarding outcomes of alternative solutions. The consequences of choice are not fully known. Many uncontrollable factors affect the outcome of decisions.

(e) Several human limitations like memory, reasoning, objectivity, perception, personal value affect the quality of decisions.

Term Paper # 6. Factors Influencing Decision Making:

There are many factors which influence decision making. Some factors can affect the entire process of decision making while some other affect only certain steps of the process. The influence of these factors will have some impact and they must be understood for effective decision making.

Normally the factors that influence the decision are:

1. Time pressures

2. Manager’s values

3. Organisational policy

4. Risk taking of manager and

5. Other factors.

1. Time Pressures:

The quality of decision depends on the availability of time given to the manager for taking decisions. Managers are forced to decide in time frames established by others. Want of time can force a manager to decide without gathering important facts or exploring possible solutions thoroughly. The quality of decisions taken leisurely is bound to be better compared to decisions taken in a hurry.

2. Manager’s Values:

Manager’s value will have a significant bearing on the quality of decisions. The value orientations of managers determine much of their behaviour. This will be reflected in their style of functioning, identification of their mission, objectives, and strategies.

Further some specific influences which have value on decision making process are:

(i) Value judgements necessary for developing objectives and assignment of priorities

(ii) In developing alternatives, it is necessary to make value judgement about the various possibilities and

(iii) Value judgements reflected in the alternatives chosen.

3. Organisational Policy:

The top management develops policies to guide the actions of the organisation. Any decision against the policy cannot be implemented. Change in policies is also not quick as they cannot be immediately.

It is usually easier and more practical to change the course of proposed decision. So this will affect the decision to be taken.

4. Manager’s Propensity for Risk:

Risk-taking is an integral component of the decision-making process. If the manager is less inclined towards risk-taking will select different objectives, his evaluation of alternatives will be different and select alternatives which are totally different from a manager who is more inclined towards risk-taking. This personal attitude of the manager influences the decision making.

5. Other Factors:

The other factors which influence the quality of decision making are:

It should facilitate a good interaction and co-ordination between departments.

The attitude of the top management should facilitate the performance of the organisation. The human resources required for performance and the skills needed for the execution must be available for performance. The financial resources needed for performance are to be provided for.

The reaction of the operatives at various levels. They are to be educated regarding the decision, they have to understand it and implement the decisions with ease and without any hesitation.

Decision making is always creative and innovative and the management should always taken on the challenges effectively.

Term Paper # 7. Theories of Decision Making:

Decisions are made by managers based on facts, experience, intuition and authority. Decisions were responsible for achieving objectives. The techniques used for arriving at a decision are to be compared with the decision to know the effectiveness of the performance of the organisation.

The theories of decisions stem from the manner in which the decisions Earnest Dale have specified the list of theories.

They are:

1. Traditional economic theory

2. Psychological theory

3. Mathematical theory.

1. Traditional Economic Theory:

This theory advocates that decision makers try to maximise profits and all their activities is aiming to do so. As advocated by traditional economists the decision makers tries to maximise profits. Any practical decision maker will always have an eye on profit maximisation.

2. Psychological Theory:

This theory advocates that what actually goes on in the decision maker’s mind when he actually makes a decision. In this connection, Herbert A. Simon has come out with an avocation which is considered as the best. He states that the decision maker ”satisfice” rather than maximise. The satisfice refers to decision-making technique in which managers accept the first satisfactory decision they uncover.

The consequences which a manager considers good enough will depend on what has been achieved in the past.

3. Mathematical Theory:

These theories help the managers in developing alternative. Solutions and specifies the risk and consequences more clearly. In mathematical theories operations research has been developed as a separate area.

Term Paper # 8. Modern Approaches to Decision Making:

Managers of today make use of modern techniques for decision making to study the normal conditions of uncertainty.

The most important techniques used are:

1. Risk Analysis

2. Decision Trees and

3. Preference Theory

1. Risk Analysis:

Under conditions of certainty managers know their objective and have accurate, measurable and reliable information about the outcome of each alternative decision they are considering. Risk occurs whenever we cannot predict an alternative’s outcome with certainty but they do have enough information to predict the probability it will lead to desired state.

Probability is a statistical measure which informs about the measure of the chance of a certain event or outcome will occurs. Generally manager feel uncertainty in decision making in which they face unpredictable external conditions or lack the information needed to establish the probability of certain events. Turbulence in decision-making occurs when objectives are unclear or the environment is changing rapidly.

Every intelligent decision maker dealing with uncertainty likes to know the size and nature of the risk he is taking in decision making. The new techniques are developed to give a more precise view of the risk. Virtually every decision is interaction of a number of critical variables many of which have an element of uncertainty but, perhaps, a fairly high degree of probability.

Risk analysis attempts to develop for every critical variable in a decision making problem a probability distribution curve. Usable ones can be derived by asking each specialist who estimated a variable to gauge the range of probability of each variable.

2. Decision Tree:

This is a type of network used to model a progression of decisions involving uncertainty. Network is made up of nods (shown as circles) connected by branches or arcs (shown as lines) which represents routing, transporting and distribution of people or material.

A decision tree is a type of network and it is named as such due to its visual presentation resembling a tree with branches. This representation forces the managers to assign probabilities to each possible outcome and to use simple expected values to determine the best decision.

This approach facilitates managers to identify the major alternatives and the fact that subsequent decisions may depend on future occurrences. By incorporating the probabilities of various events in decision tree the managers can comprehend the true probability of a decision leading to the desired results.

This is similar to other decision techniques as it exposes the hidden premises and disclose the reasoning process regarding decisions taken to deal uncertainties. It can make use of sensitivity analysis for obtaining better information about decisions. By the use of decision tree techniques, the ideas can be explained easily.

3. Preference Theory:

Other Name: Utility Theory:

According to this theory we need better understanding of the individual decision maker’s aversion to or acceptance of risk. This varies not only with people but also varies with the size of the risk, the level of managers in an organisation and financial resources involved. The top managers will take more risky decisions compared to lower level managers.

Normally we come across managers with varying level of risk acceptance and risk aversion. We do not know much about the about the attitudes of managers about risk but we know that some people are risk averters in some situations and gamblers in some others. The data can be presented in a graph and this is known as a personal curve. Most of the managers are gamblers when small stakes are involved but become risk averters when the stakes rise.

Managers are influenced by the dangers of failure and to some extent and risk averters in case of failures. Sometimes it may be true that too many managers are risk averters. By developing statistical probabilities in decision trees one can assess the manager’s willingness to assume risks and develop a personal curve. This will also facilitate managers to know about the attitude of their subordinates in taking risks. This enable them to assign people with proper roles.