Explain Decision Theory Approach.

Decision theory approach in management is an approach that uses logical concepts to help managers to formulate decisions. When using this type of approach, one will identify values and uncertainties while they are trying to make decisions that will affect their business. They will also use all the facts that are at their disposal. This will include various data. The manager will want to be as informed on the facts, as well as any pros and cons that comes with the decision before any decision is made.

Features Of Decision theory of Management

• ·     Management is essentially decision-making.
• ·     Members of the organization are decision-makers and problems solvers.
• ·    Organization can be treated as a combination of various decision centers. The   level and importance of organization members are determined on the basis of importance of decisions, which they make.
• ·     Quality of decision affects the organization effectiveness.
• ·     All factors affecting decision-making are the subject matter of study of management. Besides processes and techniques in decision making factors affecting decisions are information systems, social and psychological aspects of decision-makers.

Uses

• It demonstrates how managers can discharge their functions effectively and for this approach it provides various tools
• .Decision theorists have grappled with decisions pertaining to diagnosis and the resulting prescriptions for improving communication, incentives, reactions of the individuals to group and analysis of human values write stated objectives.

Limitation: This approach does not take the total view of management. Decision-making is vital in every school of management. This vital aspect cannot be denied but management is more than mere decision-making.