Types of Management Decisions

Types of Management Decisions-What are Management Decisions Types-What are the Types of Management Decisions

Individuals’ fallibility in making optimal decisions is recognized by the restricted rationality model. According to this hypothesis, rather than searching exhaustively for solutions, people will instead narrow their possibilities down to one or two viable choices before making a final decision. The propensity to “satisfice,” or choose the first alternative that meets basic needs, is central to the constrained rationality approach. For instance, many recent graduates may not actively seek work opportunities in all regions of the country or the world. Instead, they focus their efforts locally, and take the first offer they receive, no matter how unsatisfactory it may be. “Satisficing” means choosing the first alternative that meets minimum needs, resulting in a suboptimal outcome despite being a logical choice. In this post, we’ll examine the types of management decisions and grab extensive knowledge on the topics.

You only need to learn to recognize them for what they are and how to make the most of them. When you make bad choices, on the other hand, possibilities not only pass you by, but may as well not exist at all. For example, if there is a large demand for a product and your company can manufacture it, but you don’t make the right call at the right time, you may miss out on a lucrative opportunity.

Types of Management Decisions

Being able to create creative decisions is just as important as developing more traditional decision-making skills like logic, bounded rationality models, and intuition.Creativity is the ability to think of and implement interesting new ideas. Due to shrinking enterprise sizes and intensified marketplace rivalry, individuals and groups face a challenge to be increasingly creative for survival. Invention is the final step in the innovation process, while creativity is the first. Innovating involves not only fresh ideas but also meticulous preparation and execution. To learn more, take a look at these types of management decisions.

Strategic and Mundane Decisions

Decisions that fall under the category of “routine” are those that are made on a daily basis as part of a manager’s normal duties. These choices don’t need much in the way of study, research, or evaluation. These kind of choices are typically delegated to lower-level employees by higher-ups. On the other hand, a company’s strategic choices are the ones that matter the most.

Typically, top and middle-level administrators serve as their overseers. They often have something to do with the long-term goals and objectives of the business. Decisions of this nature necessitate thorough thought and research. For the simple reason that choices made here trickle down into everyday life.

Indeterminate Choice

When making a choice, it’s difficult to know what will happen because there are often several possibilities. Why? Because the person making the call doesn’t have all the facts and can’t predict what will happen. For instance, the amount of money made through the promotion of a new product is related to the stage of profitability the product is now in.

If things go well for a long period of time, earnings will be high, and likewise if things go poorly. Management constantly makes choices. These alternates aim to do something about the present problems. Without alternatives, management has a new challenge. Think about justice when you have to make a choice.

Decision-making and Problem-solving

Current and potential issues require the full focus of upper management. Competent upper management may be able to foresee potential issues in the same manner that they can imagine and prepare for the future.

Leaders need to think forward and have a plan for making the most of upcoming opportunities and situations. As a result, the right choices are taken right now, or in the future. How to solve a problem or exploit an opportunity are examples of the sorts of choices that need to be made. Types of management decisions vary based on the scope and impact they have on the organization.

Present and Future Decisions

People take decisions that only affect the near future. These are the kinds of choices that, on the whole, have lower levels of risk and uncertainty. However, long-term choices are made with the future in mind. This means that risks and doubts have increased. Lower-level personnel typically make short-term decisions, while higher-level administrators make long-term decisions.

Policy vs. Operational Choices

Strategic decisions directly affect organizational planning and strategy. The company’s upper management is usually responsible for making such choices. They need in-depth investigation because of the long-term effects on the business. Policy implementation requires decisions about operations.

These choices help executive-level administrators carry out their policies and accomplish their goals. Middle management and below typically make such choices. Let’s say there’s going to be a bonus issue, and the corporation announces it. The company’s rules apply here. The company must make a business choice on how to deal with and implement a bonus problem of this nature.

The most senior members of staff must make important policy choices. The most senior members of staff make these choices, and they have far-reaching consequences and relate to the most fundamental policies.

Lower and middle management make everyday decisions. The decision of whether or not to provide incentives to workers falls under the purview of policy, while the specific amount given to each worker falls within the purview of operation.

Choices, both Programmed and not

Automated judgments, typically made by middle managers and below, largely replicate previous decisions. The effects of computer-made choices are immediate, covering tasks like granting employee time off, pricing for regular customers, office supply stock levels, and purchase patterns. Such decisions are linked to upper management regulations.

In contrast, non-programmable decisions, made by top management, lack a predetermined basis and require information gathering, analysis, conclusions, and creative planning. Making non-preprogrammed decisions is increasingly challenging compared to preset judgments. Types of management decisions bridge the gap between strategic and operational decisions, focusing on implementing strategies effectively.

Actions Referred

When issues develop while doing their jobs, lower-level managers are responsible for finding solutions. Some mid- and lower-level managers lack motivation, do nothing, and avoid making urgent decisions.

They worry about the reliability of their judgment on occasion because they lack self-assurance. They report the problem to higher ups and ask for a resolution. Term for these verdicts: “referred rulings.”

Important and Unimportant Choices

Before dismissing major choices as insignificant, one should carefully consider them. Changing overhead cost allocations, adding new goods to existing lines, and various other events exemplify major decisions with long-term implications. Minor choices have no long-term repercussions, in contrast to significant ones. For instance, deciding where to keep necessities is somewhat unimportant.

Contingency Plan

The best course of action for dealing with unforeseen events is chosen. The person in charge lacks both the resources and the time to do their homework before making a call. It’s another name for making a decision on the spot. The person making decisions must prepared to act swiftly in emergencies.

Independent vs. Collaborative Choices

We call a person’s own decision to act on their own behalf a “individual decision.” Employees typically make judgments in accordance with established corporate policy. A committee consists of a group of people who meet regularly to make decisions together.

In most cases, this committee has last say over matters of critical management. In a group setting, participation from as many people as possible is prioritized. Types of management decisions are routine and follow established rules or procedures for consistent outcomes.

Interdepartmental, Non-Economic Decisions

There are more variables and more time to consider when making a long-term choice. The head of the department is responsible for making decisions on its behalf. Decisions that aren’t directly related to money are impacted by elements like scientific principles, moral behavior, etc.

Organizational and Individual Choices

The organizational goal is what a group of people are aiming at when they make a choice. Managers consider a choice personal when it has an effect on their own life. People refer to their own choices as “personal decisions.”

There will be times when these decisions will have an effect on how the business functions. For instance, a worker’s voluntary departure from the company could have consequences. Individuals cannot delegate or outsource personal decision-making as it is a unique function.


How can One Make the Best Decisions?

The process of making decisions as a group, known as a “ideation session,” can be very effective when trying to come up with new ideas and approaches. This provides a loose framework for the debate and encourages input from all members of the team.

What is the Significance of Making Choices?

The ability to make decisions is crucial because it opens up a world of options. It’s crucial to weigh all of the benefits and drawbacks before making a final choice. It’s crucial to put effort into things that will improve your odds of coming to wise choices.

How do Various Aspects Affect Final Verdicts?

There are several considerations while deciding what to do. Some examples include historical context, cognitive biases, age and personality variations, an individual’s sense of self-importance, and the depth of their devotion. Decision-making is facilitated by heuristics because they are mental quick cuts.


In order to maximize productivity, any manager must have decision-making skills. If you’re interested in learning more about the value of good decision-making in management, PRINCE2 Certification Training is a great option. As a result, you’ll be in a better position to handle any issues that crop up. We truly hope you enjoyed this lesson on types of management decisions and learned something new. Gain a more global perspective on types of decision making in management topic by reading this report.

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