Decision-making According to Peter Drucker

Decision-making and Valuation

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Donato ochan Hakim
CEO, South Sudan

Decision-making According to Peter Drucker

Definition of a Decision
A decision is a choice whereby a person performs a conclusion about a situation. This represents a course of behavior about what must or what must not be done. It is the point at which plans, policies and objectives are translated into concrete actions. Planning leads to decisions guided by company policy and objectives and implies the selection from alternative objectives, policies, procedures and programmes.
Peter Drucker
The purpose of decision-making
With decision-making we try to direct human behavior towards a future goal. If there were no alternatives, there would be no need for a decision.

Types of Decision-making
Drucker distinguishes between:
- Tactical decisions and strategic decisions. Strategy can be defined as the behavior of management in trying to achieve success for company goals in an environment of competition. It is based upon the action, or possible action of others. Strategies are solely calculated to implement plans and objectives, bearing in mind all manner of uncertainties, so that an advantageous position is attained over an opponent.
‘Tactical’ decisions are made by management and involve ‘either finding out what the resources are, or what they should be’. These include decisions upon basic objectives and may affect the productivity, organization or operation of the business.
- Organizational decisions and personal decisions. Organizational decisions are those made in the role on an official of the company and reflect company policy.
Personal decisions refer to those made by a manager as an individual and cannot be delegated.
- Basic decisions and routine decisions. Basic decisions are long-range in scope e.g. the location of a factory in development area, or deciding what product to make. Wrong decisions on these matters can be costly. Routine decisions are those which are made repetitively and need little thought.

The process of decision making.
For a proper decision to be reached the following steps must be followed:
• Define the problem to solved
• Find alternative solutions
• Analyse and compare these alternatives
• Select the plan to be followed noting relevant factors
• Make the decision effective – by taking action to put the decision into effect

Influences on Decision-making
It should be noted that, whatever decision criteria are chosen, decisions are affected by:
• The importance of the decision;
• Characteristics of the organization;
• The personality of the decision maker
• His/her state of mind when making the decision

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Decision-making and Valuation

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