Why Do System Concept Important For Managerial Decision Making
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In this competitive and knowledge rich world, managers are required to make decisions about what to do with the resources of their organization.
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The managers make numerous decisions every day which may either be very simple or complex. Each of these decisions involves the use of some or the other kind of knowledge. Many of the complex decisions may require and benefit from the use of a technique called ‘decision support systems’.
Managers must be equipped with the skill of decision making because correct decisions are very vital for the longevity and success of any organization. The decision making process is supported by decision support system. These systems are used for better problem understanding, improved reasoning, perfect planning, correct decision making and for a smooth dialogue between stakeholders.
A decision support system is nothing but a computer program application that analyzes all the available business data fed into the computer and presents graphical information with appropriate explanations so that the managers can make business decisions more easily and effectively. It is not an operational application but an informational application which gathers the data that it requires, from the data fed during the course of normal business operations. The typical information that a decision support application gathers and presents includes -- comparative weekly sales figures, projected revenue figures based on new product sales assumptions, and the probable consequences of using different decision alternatives.
A decision support system is very important because it has a great impact on the earnings of a company. It warns the management against any future crisis and facilitates careful financial planning and tax planning. A decision support system enables a manager to promptly analyze several significant aspects of the functioning of his company and allows quick comparisons between the performance of his company with the performance of other contenders in the market. Using a decision support system, a manager can simply go through the information presented graphically, read the explanations provided, and prepare himself for another round of efficient decision making.
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