In ubiquitous computing environments, smart home system is the one of major applications that offers appropriate service reacting user's specific activity intelligently. Therefore, in contrast to a traditional system, the intelligent service device in smart home system needs various user data and the information about the environment. However, it is difficult for the device to obtain the information including user's intention sufficiently. Additionally, the system demands the decision making method which provides the proper selection in intelligent devices. In this paper, we propose the smart home system applied situation awareness and the effective decision making method based on the hierarchical hidden Markov model applied to users ambient under the collected user authority and environment information. We demonstrate our approach through a simulation in the smart home system.