Managers in today’s society are often referred to as decision makers. Their decisions about allocating resources, accomplishing its goals and determining how an organisation will solve its problems (Samson & Daft, 2005 ) are fundamental to the success of an organisation. Thus it is clear that “decision making is the process of [identifying] problems and opportunities and then resolving them.” (Samson & Daft, 2005, p. 298). However, decision making often involves making decisions under uncertainty whereby managers are aware of which goals to accomplish, but information about other options and future events is unclear. Hence, managerial decision making is a complicated task that needs careful evaluation through specific decision models, such as the decision tree, and sensitivity analysis to make good decisions about the organisation’s position.
Managerial decision making involves making many decisions under uncertainty and risk. This poses many challenges for managers, due to the fact that even though their decision may have clear and logical goals, information about the future outcome with each alternative is unclear. (Samson & Daft, 2005). There are various steps a firm may undertake to structure their decisions such as recognising the decision requirement, diagnosing and analysing causes of the problem, develop alternative solutions, select the desired alternative and implement it, then seek evaluation and feedback. (Samson & Daft, 2005). By utilising these steps, decision making will be much more productive and effective for managers. Hence, decision making under uncertainty is a challenge for many managers as they must be able to make assessments, weigh up the probabilities of success and make the final financial settlement in regards to the p ...