Making decisions at various conditions

1.       Condition of certainty: - If a manager has all information he/she needs and can predict precisely the consequences of his/her action, he/she is operating under a condition of certainty. In other words condition of certainty is that condition where manager has all information’s required to make decisions, the situation is certain and stable, what happens tomorrow can be easily forecasted, under this condition to take decision is very much simple and easy because managers knows all alternatives and consequences or outcomes of all alternatives. But, such conditions rarely happen these days.

2.       Condition of risk: - Risk is associated in business and risks are associated in decision making. Decisions cannot be made at certainty all time. Some element of risk is involved in decision making. Risk consists or exists when the probability of an action being successful is less than 100%. If the decision is wrong the organization loses money, time other important assets. Decision making is risky when the outcomes of alternatives are difficult to predict. Under this condition manager knows about all alternatives but does not know the outcome of alternatives. Some sort of risk is involved in outcomes of alternatives. Risk means chances of action being failure. There probability of being successful and being failure. Manager will have required information’s but may not be sufficient.

3.       Decision under uncertainty: - Uncertainty means that managers do not have enough information’s about the environment tro understand or predict the future. Under the condition of uncertainty managers will have very much limited information’s to make decisions. Under this condition neither manager knows alternatives and nor he/she knows the outcome or consequences of alternative. The risk associated with each alternative is high. He/she has to identify or generate alternative himself/herself. Under this condition, external conditions are uncertain and they are beyond the control of management. Decision maker or manager may not have access to information. Therefore, manager or decision maker has to make the use of intuition, experience and judgment while making decisions. Managers have to make most of the decisions under the condition of uncertainty.