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Decision making-a case study of Jabong

Submitted for the

Partial Fulfillment of Requirement for the
Aw a r d o f
Bachelor of Business Administration Degree
(2013 - 2016)



Faculty, VIPS

Submitted By:
0 2 11 9 8 0 1 8 1 3 , 2 0 1 3 { S E M 3 r d , B B A ( B & I ) }

Vivekananda School of Business Studies

Vivekananda Institute of Professional Studies
AU Block (Outer Ring Road) Pitampura
Delhi - 110034

This is to certify that I have completed the PDCS Minor Project titled
of Ms. KRIT IKA NAGDEV in the partial fulfillment of the requirement
for the award of degree of Bachelor of Business Administration at
Vi v e k a n a n d a I n s t i t u t e O f P r o f e s s i o n a l S t u d i e s , D e l h i . T h i s i s a n
original piece of work & I have not submitted it earlier elsewhere.


Name of the student

Signature of Student

This is to certify that the PDCS Minor Project titled DECIS ION
MAKING-A CASE STUDY OF JABONG is an academic work done b y
RISHAB MISRA submitted in the partial fulfillment of the requirement
for the award of the degree of Bachelor of Business Administration from
Vi v e k a n a n d a Institute of Professional Studies, Delhi, under the
g u i d a n c e & d i r e c t i o n . To t h e b e s t o f m y k n o w l e d g e a n d b e l i e f t h e d a t a i s
p r e s e n t e d b y h i m / h e r i n t h e p r o j e c t h a s n o t b e e n s u b m i t t e d e a r l i e r.


Name of the Project Guide




The academic objectives for writing the dissertation are:

(a) Inculcate the habit of self study.

(b) Enhance analytical ability by comprehending management concepts through self study.

(c) Develop research ability by extracting the material from the different sources, compilation and

collating with references.

(d) Write comprehensive and exhaustive dissertation specific to a topic.

The title of the dissertation assigned to you is Decision Making:A Case Study Of Jabong and the

functional aspects to be covered in the body of the dissertation comprises of :

a) Concept Of Decision Making

b) Significance Of Decision Making

c) Types Of Decisions

d) Models Of Decision Making

e) Literature Review

f) Decision Making Process

g) Biases And Errors Affecting Decision Making

h) Case Study of Jabong

i) Conclusion
Executive Summary

A decision involves the act of choice and the alternative chosen out of the available alternatives.

The process concerned with searching and evaluating alternatives to a problem & selecting the best

alternative is known as DECISION-MAKING

According to McFarland, 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 course of behaviour chosen

from a no. of possible alternatives. "


The basic characteristics of decision-making are enumerated below:

1) It is a process of choosing acourse of action from among the alternative courses of action.

2) It is a human process involving a great extent the application of intellectual abilities.

3) It is the end process preceded by deliberation and reasoning.

4) It is always related to the environment. A manager may take one decision in a particular set of

circumstances and another in a different set of circumstances.

5) It involves a time dimension and a time lag.

6) It always has a purpose. Keeping this in view, there may just be a decision not to decide.

7) It involves all actions like defining the problem and probing and analyzing the various

alternatives which take place before a final choice is made.

8) It is goal-oriented i.e. decisions are made to achieve certain goals.

9) It is pervasive in nature i.e. managers at all levels take decisions that may vary from one level to

10) It is futuristic i.e. it makes decisions to be taken in future for achieving goals.

Steps involves in decision making process.

1 Identifying the problem.

2 Diagnose the problem.

3 Generation of alternative.

4 Evaluating & selecting of alternative.

5 Implementation of decision.

6 Review.

Identifying the problem: The decision making process begins with recognition of a problem that

requires a decision. The problem may arise due to gap between present & desire state of affairs. The

threats & opportunities created by environment changes may also create decision problem. At this

stage manager should identify & define the real problem, imagination, experience & judgment are

required for deduction of problem that requires managerial decision.

Diagnose the problem: diagnosing the real problem implies, analyzing the pro in terms of its

elements, magnitude its urgency, its causes, its relationship. In order to diagnose the problem

correctly, a manager must obtain all pertinent facts &analyse them carefully.

Generation of alternative: After defining the problem, the next in decision making is to develop the

alternatives. In searching the alternatives some of the resources that can be drawn upon are past

experience of the decision maker, Similarly with the problems & solution occurred in the past

response of the people effected by the decision.

Evaluation/ selection of best alternative: In order to make final choice of the best alternative one

will have to evaluate all possible alternatives. Peter Drucker has laid down three criterias to

evaluate various alternatives

Risk- Degree of risk involves in each alternative

Economy of effort- Cost, time & effort involved in each alternative.

Limitation of resources- Physical, financial & human resources available / some of the criterias

against which the alternatives are to be measured are quantities in nature, such as return on

investment, market share, profits & so on Qualitative- consumer attitude, employees morale, ethics

of the organization etc.

Implementation of decision: Implementation means putting the selected alternative into action &

seeing it through its completion. The process implementation starts with assigning responsibilities

to person who will be involved in carrying out the decision. The possibility of any assistance to

change should be examined carefully specially if its effects or conflicts with the personal values &

personalities or group norms of the organization.

Review: Monitoring the review of the decision. It means the effectiveness of the implemented

decision. If possible a mechanism should be built into the process to give or generate reports.

Concept Of Decision Making

Decision Making

The process by which managers respond to opportunities and threats that confront them by

analyzing options and making determinations about specific organizational goals and courses of


Decisions in response to opportunities occurs when managers respond to ways to improve

organizational performance to benefit customers, employees, and other stakeholder groups.

Decisions in response to threats events inside or outside the organization are adversely affecting

organizational performance.

Fig 1 :Decision Making Process

Managers particularly at the upper level must also have decision making skills. These refer to

abilities to break down a complex problem or situation into its components , to clinically examine
its dimensions , to proceed in a logical & step by step manner. Analytical skills are needed for

problem solving and decision making, for managing complexity, for evaluating performance and for

arriving at judgements. These involve competency to solve organizational problems in the light of

prevailing external environment in the organization are also called DIAGNOSTIC SKILLS or


Diagnostic skills include ability to determine by analysis and examination, the natural and

circumstances of a particular situation.

A decision involves the act of choice and the alternative chosen out of the available alternatives.

The process concerned with searching and evaluating alternatives to a problem and selecting the

best alternative is known as DECISION-MAKING

According to McFarland, 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 course of behaviour chosen

from a no. of possible alternatives. "

The basic characteristics of decision-making are enumerated below:

1) It is a process of choosing acourse of action from among the alternative courses of action.

2) It is a human process involving a great extent the application of intellectual abilities.

3) It is the end process preceded by deliberation and reasoning.

4) It is always related to the environment. A manager may take one decision in a particular set of

circumstances and another in a different set of circumstances.

5) It involves a time dimension and a time lag.

6) It always has a purpose. Keeping this in view, there may just be a decision not to decide.
7) It involves all actions like defining the problem and probing and analyzing the various

alternatives which take place before a final choice is made.

8) It is goal-oriented i.e. decisions are made to achieve certain goals.

9) It is pervasive in nature i.e. managers at all levels take decisions that may vary from one level to


10) It is futuristic i.e. it makes decisions to be taken in future for achieving goals.

Significance Of Decision Making

Decision making is a process of selecting the best course of action from among many alternatives. It

is useful for the successful operation of organizational activities.All the managerial functions such

as planning, organizing, directing and controlling are determined by the decision. The following

points describes the significance of decision making in the organization.

Fig 2: Significance Of Decision Making

1. Pervasive Function

Decision making is essential in each level of management. Top level management makes strategic

decisions such as planning, organizing, directing and controlling. Middle level management makes

tactical decisions such as division of works, fixation of authority and responsibility, integration of

efforts etc. Operating level management makes regular operating decisions such s preparation of

schedule of daily works, divisions of works, delegation of authority etc. Thus, decision making

function is performed in all the levels of management according to needs. This is necessary to bring

uniformity and smoothness in the organizational performance.

2. Indispensable Component

Decision making is known as an inseparable part of management functions. It is one of the essential

processes for successful operation of business. It determines all management functions and covers

every part of the organizational structure. Every manager from top level to the first line is involved

in the decision making process according to the nature of works.

3. Evaluation Of Managerial Function

Decision making is a time consuming process and decision makers spend more time to select the

alternative. The quality of decision serves as the yardstick for evaluating managerial performance. It

provides a clear line of guidance to the management for the achievement of defined objectives. The

achievement of managerial performance is evaluated and measured with planned performance.

4. Selection Of Best Alternatives

Decision making is the process of selecting a best course of action from among many alternatives. A

problem might be solved in different ways on the basis of time and situation. The decision maker

evaluates all the possible alternatives on the basis of organizational process and suitability. The

selection of the best course of action is significant to bring smoothness in operation and achieve

organizational goals.

5. Establishment Of Plans And Policies

The establishment of plans and policies is the initial part of decision making. Every organization is

established for a definite objective and for this, formation of plans and policies is necessary. Thus,

at the initial stage, the management decides the clear line of action and the procedures to gain

defined objectives. The practical implementation of defined line of actions and procedures is an

efficient way in bringing smoothness and uniformity in organizational performance. Finally, it is

helpful in achieving organizational goals.

6. Successful Operation Of Business

Decision making is one of the important tools for the successful operation of the business. In course

of operation, many problems may arise at different situations and times. The management solves

those problems in time by using decision making tools.

7. Better Utilisation of Resources

Decision making helps to utilise the available resources for achieving the objectives of the

organisation. The available resources are the 6 Ms, i.e. Men, Money, Materials, Machines, Methods

and Markets. The manager has to make correct decisions for all the 6 Ms. This will result in better

utilisation of these resources.

8. Facing Problems and Challenges

Decision making helps the organisation to face and tackle new problems and challenges. Quick and

correct decisions help to solve problems and to accept new challenges.

9. Business Growth

Quick and correct decision making results in better utilisation of the resources. It helps the

organisation to face new problems and challenges. It also helps to achieve its objectives. All this

results in quick business growth. However, wrong, slow or no decisions can result in losses and

industrial sickness.

10. Achieving Objectives

Rational decisions help the organisation to achieve all its objectives quickly. This is because rational

decisions are made after analysing and evaluating all the alternatives.
11. Increases Efficiency

Rational decisions help to increase efficiency. Efficiency is the relation between returns and cost. If

the returns are high and the cost is low, then there is efficiency and vice versa. Rational decisions

result in higher returns at low cost.

12. Facilitate Innovation

Rational decisions facilitate innovation. This is because it helps to develop new ideas, new products,

new process, etc. This results in innovation. Innovation gives a competitive advantage to the


13. Motivates Employees

Rational decision results in motivation for the employees. This is because the employees are

motivated to implement rational decisions. When the rational decisions are implemented the

organisation makes high profits. Therefore, it can give financial and non-financial benefits to the


Decision-making is a vital part of the business world. Even a low-level supervisor makes several

decisions in a work day, and with some companies, decision-making is encouraged among workers

on the line. Unlike CEOs and managers of large companies, the small business owner is largely

responsible for the ultimate outcome of all decisions with regard to her company.

Types Of Decisions

A decision is a choice made between 2 or more available alternatives.

Decision Making is the process of choosing the best alternative for reaching objectives

Managers make decisions affecting the organization daily and communicate those decisions to other

organizational members.

Some decisions affect a large number of organization members, cost a great deal of money to Carry

out, or have a long term effect on the organization. Such significant decisions can have a major

impact, not only on the management systems itself, but on the career of the manager who makes


Other decisions are fairly insignificant, affecting only a small member of organization members,

costing little to carry out, and producing only a short term effect on the organization.

Types Of Decisions:

Programmed Decisions

Programmed decisions are routine and repetitive, and the organization typically develops specific

ways to handle them. A programmed decision might involve determining how products will be

arranged on the shelves of a supermarket. For this kind of routine, repetitive problem, standard

arrangement decisions are typically made according to established management guidelines.

Non Programmed Decisions

Non programmed decisions are typically one shot decisions that are usually less structured than

programmed decision.

Strategic decisions

Strategic decisions involve long term commitments and exercise on enduring influence on the

future of the organization. These decisions define the relationship between the organization and its


Administrative decisions

These are directed towards developing divisional plans; structuring workflowsthey are primarily

middle management oriented

Individual decisions

These decisions are taken by an individual. These are concerned mainly with routine problems for

which broad policies are available. In such decisions analysis of various variables is relatively


Group decisions

These decisions are taken by a group of persons constituted for this purpose. Ex; decision taken by a

board of directors

Rational decision making means taking decisions on the basis of facts and logical reasoning .A

decision making is said to be rational when he identifies and analysis systematically identifies

alternatives and selects the most appropriate alternative on the basis of relevant data. On the other

hand decision making becomes irrational when the decision maker depends purely on hunch and

intuition without using relevant facts and figures.

The administrative model of bounded rationality was given by Prof.Herbert Simon to explain the

decision making behavior in real life .the model recognizes the fact that due to several constraints

managers are unable to make perfectly rational decisions.There are several boundaries to rationality

in decision making.The principle of bounded rationality has the following implications:

1. An individual does not study and analyze problem fully due to personal bias and indifferent

attitude etc.

2. An individual does not have full knowledge of the alternatives and their consequences.

3. An individual interprets the organization goals in its own way.

4. An individual does not search for the best solution but search for a good solution.In other words

individual aims at a satisfying solution rather than the optimum solution.

5. The effectiveness of the decision is dependent upon the environmental factors that are beyond the

control of the decision making.

Fig 3:Decisions In Action

Group decision-making techniques

Consensus decision-making tries to avoid "winners" and "losers". Consensus requires that a

majority approve a given course of action, but that the minority agree to go along with the course of

action. In other words, if the minority opposes the course of action, consensus requires that the

course of action be modified to remove objectionable features.

Voting-based methods.

Range voting lets each member score one or more of the available options. The option with the

highest average is chosen. This method has experimentally been shown to produce the lowest

Bayesian regret among common voting methods, even when voters are strategic.
Majority requires support from more than 50% of the members of the group. Thus, the bar for

action is lower than with unanimity and a group of "losers" is implicit to this rule.

Plurality, where the largest block in a group decides, even if it falls short of a majority.

Delphi method is structured communication technique for groups, originally developed for

collaborative forecasting but has also been used for policy making.

Dotmocracy is a facilitation method that relies on the use of special forms called Dotmocracy

Sheets to allow large groups to collectively brainstorm and recognize agreement on an unlimited

number of ideas they have authored.

Individual decision-making techniques

Pros and cons: listing the advantages and disadvantages of each option, popularized by Plato and

Benjamin Franklin. Contrast the costs and benefits of all alternatives. Also called "rational decision-


Simple prioritization: choosing the alternative with the highest probability-weighted utility for each

alternative (see Decision analysis).

Satisficing: examining alternatives only until an acceptable one is found.

Elimination by aspects: choosing between alternatives using Mathematical psychology.The

technique was introduced by Amos Tversky in 1972. It is a covert elimination process that involves

comparing all available alternatives by aspects. The decision-maker chooses an aspect; any

alternatives without that aspect are then eliminated. The decision-maker repeats this process with as

many aspects as needed until there remains only one alternative.

Preference trees: In 1979, Tversky and Shmuel Sattach updated the elimination by aspects

technique by presenting a more ordered and structured way of comparing the available alternatives.

This technique compared the alternatives by presenting the aspects in a decided and sequential

order. It became a more hierarchical system in which the aspects are ordered from general to

specific .

Acquiesce to a person in authority or an "expert"; "just following orders".

Flipism: flipping a coin, cutting a deck of playing cards, and other random or coincidence methods

Prayer, tarot cards, astrology, augurs, revelation, or other forms of divination.

Taking the most opposite action compared to the advice of mistrusted authorities (parents, police

officers, partners...)

Opportunity cost: calculating the opportunity cost of each options and decide the decision.

Bureaucratic: set up criteria for automated decisions.

Political: negotiate choices among interest groups.

Participative decision-making (PDM): a methodology in which a single decision-maker, in order to

take advantage of additional input, opens up the decision-making process to a group for a

collaborative effort.

Use of a structured decision-making method.

Individual decision-making techniques can often be applied by a group as part of a group decision-

making technique.

A need to use software for a decision-making process is emerging for individuals and businesses.

This is due to increasing decision complexity and an increase in the need to consider additional

stakeholders, categories, elements or other factors that effect decisions.


Decision Making Models

There are many types of decision making and these can be easily categorized into the

following 4 groups:





Decision Support Systems

Recognition primed decision making


In economics, it is thought that if humans are rational and free to make their own decisions, then they

would behave according to rational choice theory. This theory states that people make decisions by

determining the likelihood of a potential outcome, the value of the outcome and then multiplying the

two. For example, with a 50% chance of winning $20 or a 100% chance of winning $10, people more

likely to choose the first option.

In reality, however, there are some factors that affect decision-making abilities and cause people to

make irrational decisions, one of them being availability bias. Availability bias is the tendency for

some items that are more readily available in memory to be judged as more frequently occurring. For

example, someone who watches a lot of movies about terrorist attacks may think the frequency of

terrorism to be higher than it actually is.

Rational decision making is the commonest of the types of decision making that is taught and learned

when people decide that they want to improve their decision making. These are logical, sequential

models where the emphasis is on listing many potential options and then working out which is the

best. Often the pros and cons of each option are also listed and scored in order of importance.

The rational aspect indicates that there is considerable reasoning and thinking done in order to select

the optimum choice. Because we put such a heavy emphasis on thinking and getting it right in our

society, there are many of these models and they are very popular. People like to know what the steps

are and many of these models have steps that are done in order.

People would love to know what the future holds, which makes these models popular. Because the

reasoning and rationale behind the various steps is that if you do x, then y should happen. However,

most people have personal experience that the world usually doesn't work that way.


The second of the types of decision making are the intuitive models. The idea here is that there may

be absolutely no reason or logic to the decision making process. Instead, there is an inner knowing, or

intuition, or some kind of sense of what the right thing to do is.

And there are probably as many intuitive types of decision making as there are people. People can

feel it in their heart, or in their bones, or in their gut and so on. There are also a variety of ways for

people to receive information, either in pictures or words or voices.

People talk about extra sensory perception as well. However, they are still actually picking up the

information through their five senses. Clair sentience is where people feel things, clair audience is

hearing things and clairvoyance is seeing things.

And of course we have phrases such as 'I smell a rat', ' it smells fishy' and 'I can taste success ahead'.

Other types of decision making in the intuitive category might include tossing a coin, throwing dice,

tarot cards, astrology, and so on.

Decision wheels are usually more humorous than intuitive but they do have a serious application.


Many decisions are actually a result of combinations of rational and intuitive processes. This can be

deliberate where a person combines aspects of both, or it can occur unwittingly.


Instead of evaluating all the possible options and choosing the best, satisficing is where we pick the

first one that will give us the result. We choose an option that is 'good enough', one that satisfies our

needs and sacrifices other potentially better options. Hence, satisfice.

Decision Support Systems

Because computers can process large amounts of data quickly, they were soon put to use to help

make decisions. Decision Support Systems range from a simple spreadsheet to organize information

graphically, to very complex programs organizing info in international companies and including

artificial intelligence that can suggest alternative options and solutions.

There are various types of decision making systems depending on how many people are involved, the

form of the information being processed, what type of result is required, and so on.

There are pros and cons to using computers in this way, and of course, the computer is only as good

as the information that it is processing. Which means that it still comes down to the humans...

Recognition primed decision making

Gary Klein has spent considerable time studying human decision making and his results are very

interesting. He believes that we make 90 to 95% of our decisions in a pattern recognition way. He

suggests that what we actually do is gather information from our environment in relation to the

decision we want to make. We then pick an option that we think will work. We rehearse it mentally

and if we still think it will work, we go ahead.

If it does not work mentally, we choose another option and run that through in our head instead. If

that seems to work, we go with that one. We pick scenarios one by one, mentally check them out, and

as soon as we find one that works, we choose it.

He also points out that as we getmore experience, we canrecognise more patterns, and we make

better choices more quickly.

Of interest here is that the military in many countries have adapted his methods because they are

considerably more effective than any of the types of decision making we've discussed already. In

fact, you could say that his model is a combination of the rational and intuitive approaches. (That's

why I said above that there are only 4 groups!) It's also an example of satisficing

The Administrative Approach

Bounded Rationality (Herbert Simon)

The boundaries on rational decision making imposed by ones values, abilities, and limited capacity

for processing information. Evans et al. (1993) distinguish between rationality as defined by rules of

logic (e.g. deductive reasoning principles) and something being rational if it enables you to achieve

what you want to achieve. Evans et al. (1993) make the point that where people are shown to be

irrational in cases where the principles of particular decision making theories are violated, this is

because these two different ideas of rationality are incorrectly taken as connected (i.e. that rational

process reasoning (fulfilling logical principles) is needed to achieve rational desires). Therefore, it

seems that the question is not so much as to whether decision making is rational, but how rationality

is qualified. In cases of suspected financial elder abuse, the rationality debate highlights the conflict

professionals have to address in terms of how they know the rules state they should act, versus what

they think is logical. To study decision making it is important to consider how professionals address

this conflict as part of the decision making process.


Literature Review

According to Dr CB Gupta,The process concerned with searching and evaluating

alternatives to a problem and selecting the best alternative is known as DECISION-


According to McFarland, 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 course of

behaviour chosen from a no. of possible alternatives. "

According to Barron's Accounting Dictionary, Purposeful selection from among a set of

alternatives in light of a given objective. Decision-making is not a separate function of

management. In fact, decision-making is intertwined with the other functions, such as

planning, coordinating, and controlling. These functions all require that decisions be made.

For example, at the outset, management must make a critical decision as to which of several

strategies would be followed. Such a decision is often called a strategic decision because of its

long-term impact on the organization.Also, managers must make scores of lesser decisions,

tactical and operational, all of which are important to the organization's well-being.

According to Gale Encyclopedia of Small Business, Decision making is a vital component of

small business success. Decisions that are based on a foundation of knowledge and sound

reasoning can lead the company into long-term prosperity; conversely, decisions that are

made on the basis of flawed logic, emotionalism, or incomplete information can quickly put a

small business out of commission (indeed, bad decisions can cripple even big, capital-rich

corporations over time). All businesspeople recognize the painful necessity of choice.

Furthermore, making these choices must be done in a timely fashion, for as most people

recognize, indecision is in essence a choice in and of itselfa choice to take no action.

Ultimately, what drives business success is the quality of decisions, and their implementation.

Decision Making Process

Each step in the decision-making process may include social, cognitive and cultural obstacles to

successfully negotiating dilemmas. It has been suggested that becoming more aware of these

obstacles allows one to better anticipate and overcome them.The Arkansas program presents eight

stages of moral decision-making based on the work of James Rest:

1. Establishing community: creating and nurturing the relationships, norms, and procedures that will

influence how problems are understood and communicated. This stage takes place prior to and

during a moral dilemma.

2. Perception: recognizing that a problem exists.

3. Interpretation: identifying competing explanations for the problem, and evaluating the drivers

behind those interpretations.

4. Judgment: sifting through various possible actions or responses and determining which is more


5. Motivation: examining the competing commitments which may distract from a more moral

course of action and then prioritizing and committing to moral values over other personal,

institutional or social values.

6. Action: following through with action that supports the more justified decision. Integrity is

supported by the ability to overcome distractions and obstacles, developing implementing skills, and

ego strength.

7. Reflection in action.

8. Reflection on action.
Decision-making involves a number of steps which need to be taken in a logical manner. This is

treated as a rational or scientific 'decision-making process' which is lengthy and time consuming.

Such lengthy process needs to be followed in order to take rational/scientific/result oriented

decisions. Decision-making process prescribes some rules and guidelines as to how a decision

should be taken / made. This involves many steps logically arranged. It was Peter Drucker who first

strongly advocated the scientific method of decision-making in his world famous book 'The Practice

of Management' published in 1955. Drucker recommended the scientific method of decision-making

which, according to him, involves the following six steps:

-Defining / Identifying the managerial problem,

-Analyzing the problem,

-Developing alternative solutions,

-Selecting the best solution out of the available alternatives,

-Converting the decision into action, and

-Ensuring feedback for follow-up.

The figure given below suggests the steps in the decision-making process:-

Decision Making Process

Identifying the Problem

Identification of the real problem before a business enterprise is the first step in the process of

decision-making. It is rightly said that a problem well-defined is a problem half-solved. Information

relevant to the problem should be gathered so that critical analysis of the problem is possible. This

is how the problem can be diagnosed. Clear distinction should be made between the problem and

the symptoms which may cloud the real issue. In brief, the manager should search the 'critical factor'
at work. It is the point at which the choice applies. Similarly, while diagnosing the real problem the

manager should consider causes and find out whether they are controllable or uncontrollable.

Analyzing the Problem: After defining the problem, the next step in the decision-making process is

to analyze the problem in depth. This is necessary to classify the problem in order to know who

must take the decision and who must be informed about the decision taken. Here, the following four

factors should be kept in mind:

-Futurity of the decision,

-The scope of its impact,

-Number of qualitative considerations involved, and

-Uniqueness of the decision.

Collecting Relevant Data

After defining the problem and analyzing its nature, the next step is to obtain the relevant

information/ data about it. There is information flood in the business world due to new

developments in the field of information technology. All available information should be utilised

fully for analysis of the problem. This brings clarity to all aspects of the problem.

Developing Alternative Solutions

After the problem has been defined, diagnosed on the basis of relevant information, the manager has

to determine available alternative courses of action that could be used to solve the problem at hand.

Only realistic alternatives should be considered. It is equally important to take into account time and

cost constraints and psychological barriers that will restrict that number of alternatives. If necessary,

group participation techniques may be used while developing alternative solutions as depending on

one solution is undesirable.

Selecting the Best Solution

After preparing alternative solutions, the next step in the decision-making process is to select an

alternative that seems to be most rational for solving the problem. The alternative thus selected must

be communicated to those who are likely to be affected by it. Acceptance of the decision by group

members is always desirable and useful for its effective implementation.

Converting Decision into Action

After the selection of the best decision, the next step is to convert the selected decision into an

effective action. Without such action, the decision will remain merely a declaration of good

intentions. Here, the manager has to convert 'his decision into 'their decision' through his leadership.

For this, the subordinates should be taken in confidence and they should be convinced about the

correctness of the decision. Thereafter, the manager has to take follow-up steps for the execution of

decision taken.

Ensuring Feedback

Feedback is the last step in the decision-making process. Here, the manager has to make built-in

arrangements to ensure feedback for continuously testing actual developments against the

expectations. It is like checking the effectiveness of follow-up measures. Feedback is possible in the

form of organised information, reports and personal observations. Feed back is necessary to decide

whether the decision already taken should be continued or be modified in the light of changed


Every step in the decision-making process is important and needs proper consideration by

managers. This facilitates accurate decision-making. Even quantitative techniques such as CPM,

PERT/OR, linear programming, etc. are useful for accurate decision-making. Decision-making is

important as it facilitates entire management process. Management activities are just not possible

without decision-making as it is an integral aspect of management process itself. However, the

quality of decision-making should be always superior as faulty/irrational decisions are always

Various advantages of decision-making (already explained) are easily 'available when the entire

decision-making process is followed properly. Decisions are frequently needed in the management

process. However, such decisions should be appropriate, timely and rational. Faulty and hasty

decisions are wrong and even dangerous. This clearly suggests that various advantages of decision-

making are available only when scientific decisions are taken by following the procedure of

decision-making in an appropriate manner.


Biases and Errors In Decision Making

Pear Products is a technology firm that makes cool gadgets for consumers. They are responsible for

over 10 years of successful product launches and sales profits. Recently, though, the company's

stock price has plummeted amidst horrible new product launches and marketing programs. An

outside consultant has been hired to try and get Pear Products back on track.

The consultant thinks that Pear Products' woes stem primarily from bad decision-making, so his

main job will be to identify common biases and judgment errors in those decisions and figure out

recommendations to fix them. Common biases are prejudices or decisions that are not fair and

balanced. Judgment errors are business errors or mistakes that occur due to poor decision-making.

In other words, biases focus on small bits of information instead of the entire amount, and

judgments are based on bad logic and reasoning.

Cognitive and Personal Biases

Biases usually creep into decision-making processes. Many different people have made a decision

about the same question (e.g. "Should I have a doctor look at this troubling breast cancer symptom

I've discovered?" "Why did I ignore the evidence that the project was going over budget?") and then

craft potential cognitive interventions aimed at improving the outcome of decision-making.

Here is a list of commonly debated biases in judgment and decision-making.

Selective search for evidence (aka confirmation bias; Scott Plous, 1993).

People tend to be willing to gather facts that support certain conclusions but disregard other facts

that support different conclusions. Individuals who are highly defensive in this manner show
significantly greater left prefrontal cortex activity as measured by EEG than do less defensive


Premature termination of search for evidence.

People tend to accept the first alternative that looks like it might work.

Cognitive inertia.

Unwillingness to change existing thought patterns in the face of new circumstances.

Selective perception.

We actively screen out information that we do not think is important (see also prejudice). In one

demonstration of this effect, discounting of arguments with which one disagrees (by judging them

as untrue or irrelevant) was decreased by selective activation of right prefrontal cortex.

Wishful thinking.

A tendency to want to see things in a certain usually positive light, which can distort perception

and thinking.

Choice-supportive bias

Occurs when people distort their memories of chosen and rejected options to make the chosen

options seem more attractive.


People tend to place more attention on more recent information and either ignore or forget more

distant information (see semantic priming). The opposite effect in the first set of data or other

information is termed pimacy effect.

Repetition bias.
A willingness to believe what one has been told most often and by the greatest number of different


Anchoring and adjustment.

Decisions are unduly influenced by initial information that shapes our view of subsequent


Group think.

Peer pressure to conform to the opinions held by the group.

Source credibility bias.

A tendency to reject a person's statement on the basis of a bias against the person, organization, or

group to which the person belongs. People preferentially accept statement by others that they like

(see prejudice).

Incremental decision-making and escalating commitment.

We look at a decision as a small step in a process and this tends to perpetuate a series of similar

decisions. This can be contrasted with "zero-based decision-making" (see slippery slope).

Attribution asymmetry.

People tend to attribute their own success to internal factors, including abilities and talents, but

explain their failures in terms of external factors such as bad luck. The reverse bias is shown when

people explain others' success or failure.

Role fulfillment.

A tendency to conform to others' decision-making expectations.

Underestimating uncertainty and the illusion of control.

People tend to underestimate future uncertainty because of a tendency to believe they have more

control over events than they really do.

Framing bias.

This is best avoided by using numeracy with absolute measures of efficacy.

Sunk-cost fallacy.

A specific type of framing effect that affects decision-making. It involves an individual making a

decision about a current situation based on what they have previously invested in the situation. A

possible example to this would be an individual that is refraining from dropping a class that that

they are most likely to fail, due to the fact that they feel as though they have done so much work in

the course thus far.

Prospect theory.

Involves the idea that when faced with a decision-making event, an individual is more likely to take

on a risk when evaluating potential losses, and are more likely to avoid risks when evaluating

potential gains. This can influence one's decision-making depending if the situation entails a threat,

or opportunity.

Reference class forecasting was developed to eliminate or reduce cognitive biases in decision-


Ability-Type Biases

The consultant was set on discovering why Pear Products was self-destructing and unsuccessful

after so many profitable years. First, he found several biases relating to the company and its

members' perceived ability. The very first reason for Pear's issues was because upper management

was culpable of anoverconfidence bias. This is when upper management has a higher confidence of

their capabilities and successes than their actual skills and experience will support.
As with most successful companies, Pear Products felt that they were untouchable and that they

could slap their pear emblem on any product and it would sell. They were overconfident due to their

many years of success. The consultant found that they were not paying attention to new technology

startups that were designing more advanced and cooler products. His first recommendation was to

get humble quick, and go back to designing unique products that fulfill a consumer need.

The consultant also found that most of Pear's upper management was guilty of hindsight bias, which

is when managers falsely believe that they predicted the result of a decision after the outcome is

known. It is understandable that since Pear Product's business is plummeting, all of the managers do

not want to be blamed for the mistake. Now each manager is reporting to the consultant that they

had known the products were poor choices for the market.

Information-Type Bias

The consultant also began to tackle how Pear Products came to decide on what products to develop

and found numerous biases relating to how they analyzed information. For instance, he found that

they were responsible for anchoring bias in their decision-making. This is when managers rely too

heavily on one piece of information in making their final decision.

For example, Pear Products gave the go-ahead to two new phones that had large screens. Consumer

research studies showed that people wanted larger screens on their tablets, but not their phones.

Pear Products relied on this piece of information to design their new phones without paying

attention to the whole thing. The end result was that consumers felt the phones were too large and

cumbersome and sales were nonexistent.

Some of the managers were responsible for even more bad decisions. Pear Products' last new

product was the release of music streaming software, a feature that some managers in the company

heavily supported. In one research study, the team did mention the popularity of music streaming

applications. However, the team also ignored numerous trend reports that showed this area was

slowing and oversaturated with competitors.

Although research showed that the market was oversaturated with this type of product, the Pear

Product team still invested large development costs in this idea. They were guilty of confirmation

bias, which is when managers only use data that will confirm their decision. The team spun the facts

to support the new product and ended up with a failure. The consultant felt that Pear Products

needed an independent research team to make suggestions on new products and eliminate

confirmation and anchoring biases.

Finally, the consultant found availability bias, which is when individuals overcompensate for the

chance of something occurring because it is a memorable event, making it the first available thing

you think of. Pear Products felt that any product with their logo would be successful, because in the

past each new product launch brought in rave reviews and big profits. The team felt that they were

untouchable, and this cavalier attitude resulted in their failure. The team also did not know when to

admit defeat because they were only thinking about past successes.

Escalation Of Commitment Bias

There was one more bias the consultant found. One of Pear Products' biggest mistakes was

constantly having an escalation of commitment to failing product lines. Pear Products would keep

selling and marketing bad products just because enormous amounts of time and money were

initially invested. The consultant found that the company needed to cut their losses with poorly

performing products.

A Case Study Of Jabong

Jabong.com is an Indian fashion and lifestyle e-commerce portal. It retails apparel, footwear,

accessories, beauty products, fragrances, home accessories and other fashion and lifestyle products.

The company is headquartered in Gurgaon, NCR. Company Information It is an Indian fashion and

lifestyle e-commerce portal The company is headquartered in Gurgaon, NCR.It was one of the

most visited e-commerce sites during the Great Online Shopping Festival 2013 The e-store at

present carries over 1000 brands and over 90,000 products. Other products include jewellery and

gold coins.

Inception & Growth

Jabongs successful penetration in the Indian e-tail market is helped by various partnerships.

Because of its success, Nike partnered with Jabong and launched its new range of cricket gear on

Jabongs site.

Jabong.com won the "Online Retailer of the Year" award in the first eTailing India e- commerce

industry awards. Jabong.com received the award for the Most Impactful Launch of the year at

Pitch Brands 50 Awards 2013.

The site started operations in January 2012. It was co-founded by Arun Chandra Mohan, Praveen

Sinha, and Lakshmi Potluri after which Manu Jain, & Mukul Bafana joined the organization.The

managing officers are Arun Chandra Mohan and Praveen Sinha.

In March 2013, Jabong was shipping 6000-7000 orders a day. In March 2013, the annual revenues

of Jabong was estimated to be 100-150 mn USD. During September 2013 Jabong was shipping

14,000 orders on a daily basis out of which 60% were from small towns.

Jabong was one of the most visited e-commerce sites during the Great Online Shopping Festival

2013. Company representatives claimed that its revenues increased five to six times compared to a

usual day, and that Jabong set a record for sale in the male fashion category.

Products and Brand

Jabong sells shoes, apparel accessories, home dcor and furniture through its website. The e-store at

present carries over 1000 brands and over 90,000 products. Other products include jewellery and

gold coins. In November 2012, Jabong.com and cricket equipment maker SG Cricket presented a

range of Virender Sehwag cricket bats VS319 which was sold exclusively through Jabong.

Jabong has an exclusive partnership with the Spanish casual clothing brand Desigual, Italian

clothing and shoe brand Geox and UK high street fashion brands Dorothy Perkins,Miss Selfridge

and River Island. In November 2013, Jabong entered into a partnership with the brand Jack &

Jones, to sell merchandise for the band Above & Beyond.

In January 2014, Jabong partnered with Stylista, a collaborative fashion platform. The collection

includes Indian designers like Wendell Rodricks, Priyadarshini Rao and Nishka Lulla.

In 2014, the company will launch an ethnic womenswear collection designed by Rohit Bal. It is also

launching in-house brands covering apparel, shoes and accessories.

In May 2014 Jabong partnered with NBA to retail NBA merchandise in India.

Business Models

Jabong.com follows both an inventory model and a managed marketplace model. In the inventory

model, products are sourced from brands and stored in the Jabong warehouse. In the managed
marketplace model, Jabong doesnt store the inventory but takes care of customer service and


Jabongs logistic operations launched JaVAS as a separate service independent of Jabong. JaVAS

covers around 50-55 cities and a majority of its customers are e-commerce firms. In 2013 Jabong

sold its third-party logistics service JaVAS to Gurgaon based QuickDel Logistics.

Marketing Campaigns

The company's main source of promotion has been the internet.

The company launched its first TV campaign in March 2012.Other television campaigns appeared

in September 2012 and during 2013 Jabong.

In November 2013 Jabong together with Puma launched the digital fitness campaign Gear up

Buddy with Bollywood actor Chitrangada Singh.

In a bid to position itself as an online fashion destination, Jabong has partnered with Lakme Fashion

Week for next four seasons and with designer Rohit Bal for an exclusive collection.

Jabong.com launched the first ever Online Fashion Week 'India Online Fashion Week'. As per India

Today the event has been positioned as a platform for young and aspiring designers,stylists, models

and photographers. The selected artists are to be mentored by fashion industry experts which

includes celebrity mentor Yami Gautam.

Jabong.com launched a monthly fashion magazine "The Juice" in April. The magazine covers

stories and features around fashion, beauty, people, trends, travel and pop culture.

Movie Related Products

In May 2013 Jabong presented a fashion collection based on the Bollywood movie Yeh Jawani Hai

Deewani. Jabong showcased the fashion apparel used in the movie by the movie stars.

In July 2013 Jabong associated with Bollywood again through the movie 'Bhaag Milkha Bhaag',

and offered a collection inspired by the movie.

In its third association with Bollywood, Jabong in Dec 2013 presented a collection of products

inspired by the movie Dhoom 3, including bags, hats, pendants and rings.
Online Traffic

According to a ComScore report of September 2012, Jabong.com had the second highest amount of

traffic on its website, among Indian e-commerce websites, within a few months of its launch.In

November 2013, Jabong.com held an Alexa Traffic ranking of 37 in India.Jabong also ranked 10th

in Google Zeitgeist India trends making it 10th most searched term in 2012 in India.

International Store

Jabong also has an international store called Jabongworld.com, which sells Indian ethnic wear and

western wear such as sarees, lehengas, salwar suits and dress materials, dresses and tunics priced in

foreign currencies.

Awards and Recognition

Jabong.com won the "Online Retailer of the Year" award in the first eTailing India e-commerce

industry awards.

Jabong.com received the award for the Most Impactful Launch of the year at Pitch Brands 50

Awards 2013.

According to The Brand Trust Report India Study - 2013 by Trust Research Advisory, Jabong

ranked among the top 25 trusted Online brands in India.

Jabong is among the top 3 ecommerce players in India when it comes to customer satisfaction.

It has Google page rank 5/10. It has been receiving a daily page view of 3 million hits. Daily

advertisement revenue is $9,116 USD and monthly revenue $273,481 USD. Average page load time

is 2 seconds, which is 31% faster than other websites around the world. It is linked with 2049 other


Research needs to be undertaken to explore decision making in the context of financial elder abuse.

This is important to determine how professionals identify that financial abuse is occurring, the

decisions that have to be made in such cases and factors that can help or hinder decision making.

This paper considered a range of judgement and decision making theories and approaches including

utility theory, actuarial judgements, dual process models, heuristics and biases and social judgement

theory. The normative, descriptive and prescriptive application of these theories and approaches to

the study of decision making in relation to financial elder abuse was discussed.

An additional consideration is how the theoretical underpinning of the research impacts upon the

methodology chosen. The theoretical overview segment of this working paper indicates that

judgement analysis methodology would be useful in context of research on financial elder abuse.

After detailed information from participants about their experience of decision making is obtained,

the relationship between decision making cues and judgements can then be examined in more detail

by the application of judgement analysis techniques.


Principles Of Management Dr. C.B. Gupta Edition : 8th Edition, 2013