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Chapter4

Foundation

sof DecisionMaking

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Learning Outcomes

Describe the decision-making process.

Explain the three approachesmanagers can use to make decisions.

Describe the types of decisions anddecision-making conditions managersface.

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Learning Outcomes (cont.)

Discuss group decision-making.

Discuss contemporary issues inmanagerial decision making.

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4.1Describe the

decision-makingprocess.

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How Do Managers MakeDecisions?

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dentif!ing a Decision"roblem

"roblem#

a discrepancy !et"een an e#isting anda desired state of a$airs.

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dentif!ing DecisionCriteria$ele%ant Factors#

Price

&odel

'i(e

&anufacturer

)ptions

*epair record

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&eighting Criteria

1. &ost importantcriterionassigned a

"eight of 10.2. )ther "eights

assignedagainst thisstandard.

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De%eloping 'lternati%es

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'nal!(ing 'lternati%es

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)electing the *est'lternati%e

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mplementing theDecision

Decision implementation#

putting a decision into action.

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E%aluating the Decision

'ppraising the outcome of thedecision#

as the pro!lem resol/ed

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Common Errors

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4.2Explain the three

approachesmanagers can use to

make decisions.

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+hree 'pproaches ,sed toMake Decisions# +!pes of

Decisions

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$ational Model

$ational decision making#

choices that are consistent and /alue-ma#imi(ing "ithin specied constraints.

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*ounded $ationalit!

)atis-ce

Escalation of

commitment

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ntuiti%e Decision Making

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4.3 Describe the typesof decisions and

decision-making

conditions that

managers face.

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+!pes of "roblems

1. 'tructured pro!lem

2. nstructured pro!lem

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+!pes of Decisions

"rogrammed#

*epetiti/e decisions that can !ehandled using a routine approach.

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Types of Decisions (cont.)

.onprogrammed#

*epetiti/e decisions that can !e

handled using a routine approach

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"roblems/ Decision +!pes/and Organi(ational Le%els

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Decision0MakingConditions

3ertainty

*isk

ncertainty

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4.4

Discuss groupdecision-making.

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How Do 1roups MakeDecisions?ecisions are often made !y groupsrepresenting the people "ho "ill !e mosta$ected !y those decisions.

3ommittees

ask forces

*e/ie" panels

ork teams

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'd%antages of 1roupDecision Making

&ore complete information

i/ersity of e#periences6perspecti/es

&ore alternati/es generated

7ncreased acceptance of solution

7ncreased legitimacy

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Disad%antages of 1roupDecision Making

ime-consuming

&inority domination

8m!iguous responsi!ility

Pressures to conform

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1roupthink

hen a group e#erts e#tensi/e pressureon an indi/idual to "ithhold his or herdi$erent /ie"s in order to appear to !ein agreement.

hat it does

9o" it occurs 9o" to minimi(e it

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&hen 're 1roups MostE2ecti%e?

ndi%idual:aster decisionmaking

&ore e;cient useof "ork hours

1roup&ore accuratedecisions

&ore creati/e&oreheterogeneousrepresentation

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mpro%ing 1roup DecisionMaking

Make group decisions morecreati%e b!#

1. =rainstorming2. he nominal group techni>ue

. Electronic meetings

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4.5 Discusscontemporary

issues in

managerial decision

making.

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Contemporar! ssues

.ational culture in?uences the "aydecisions are made and the degree of

risk in/ol/ed.

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Contemporar! ssues

Creati%it! lets the decision maker@

nderstand a pro!lem more fully

'ee pro!lems others canAt

7dentify all /ia!le alternati/es

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Contemporar! ssues

Design thinking#approachingmanagement

pro!lems asdesigners approachdesign pro!lems

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Contemporar! ssues

*ig data

he /ast amounts of >uantia!le

information that can !e analy(ed !yhighly sophisticated data processing.

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