managers as decision makers

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Managers as Decision Makers

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  • 1. Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-1

2. Describe the eight steps in the decision-makingprocess Explain the four ways managers make decisions Classify decisions and decision-makingconditions Classify decisions and decision-makingconditions Identify effective decision-making techniquesCopyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-2 3. Decision Making Decision - making a choice from two or morealternatives. Problem - an obstacle that makes it difficult toachieve a desired goal or purpose.Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-3 4. The Decision Making Process1. Identifying a problem and decision criteriaand allocating weights to the criteria2. Developing, analyzing, and selecting analternative that can resolve the problem3. Implementing the selected alternative4. Evaluating the decisions effectivenessCopyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-4 5. Exhibit 7-1: Decision-Making ProcessCopyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-5 6. Step 1: Identifying a Problem Characteristics of Problems A problem becomes a problem when a managerbecomes aware of it. There is pressure to solve the problem. The manager must have the authority,information, or resources needed to solve theproblem.Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-6 7. Step 2: Identifying Decision Criteria Decision criteria are factors that are important(relevant) to resolving the problem, such as: Costs that will be incurred (investments required) Risks likely to be encountered (chance of failure) Outcomes that are desired (growth of the firm)Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-7 8. Exhibit 7-2: Important Decision CriteriaCopyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-8 9. Step 3: Allocating Weights to the Criteria Decision criteria are not of equal importance: Assigning a weight to each item places the itemsin the correct priority order of their importance inthe decision-making process.Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-9 10. Step 4: Developing Alternatives Identifying viable alternatives Alternatives are listed (without evaluation) thatcan resolve the problem.Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-10 11. Exhibit 7-3: Possible AlternativesCopyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-11 12. Step 5: Analyzing Alternatives Appraising each alternatives strengths andweaknesses An alternatives appraisal is based on itsability to resolve the issues related to thecriteria and criteria weight.Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-12 13. Exhibit 7-4: Evaluation of AlternativesCopyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-13 14. Step 6: Selecting an Alternative Choosing the best alternative The alternative with the highest total weight isCopyright 2012 Pearson Education,chosen.Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-14 15. Step 7: Implementing theAlternative Putting the chosen alternative into action- Conveying the decision to and gainingcommitment from those who will carry out thealternativeCopyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-15 16. Step 8: Evaluating DecisionEffectiveness The soundness of the decision is judged by itsoutcomes. How effectively was the problem resolved byoutcomes resulting from the chosen alternatives? If the problem was not resolved, what wentwrong?Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-16 17. Exhibit 7-5: Decisions Managers May MakeCopyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-17 18. Rational Decision-Making Rational Decision-Making - describes choicesthat are logical and consistent whilemaximizing value. Bounded Rationality - decision making thatsrational, but limited (bounded) by anindividuals ability to process information. Satisfice - accepting solutions that are goodenough.Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-18 19. Intuitive Decision-Making Intuitive decision-making Making decisions on thebasis of experience,feelings, andaccumulated judgment.Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-19 20. Exhibit 7-6: What Is Intuition?Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-20 21. Programmed vs. Non-Programmed Decisions Programmed Decision - a repetitive decisionthat can be handled by a routine approach. Non-programmed Decisions - unique andnonrecurring decisions that require a custom-madesolution.Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-21 22. Types of ProgrammedDecisions Procedure - a series of interrelated steps thata manager can use to apply a policy inresponse to a structured problem. Rule - an explicit statement that limits what amanager or employee can or cannot do. Policy - a general guideline for making adecision about a structured problem.Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-22 23. Exhibit 7-7: Programmed VersusNon-programmed DecisionsCopyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-23 24. Types of Problems Structured Problems - straightforward,familiar, and easily defined problems. Unstructured Problems - problems that arenew or unusual and for which information isambiguous or incomplete.Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-24 25. Decision-Making Situations Certainty a situation in which a manager can make anaccurate decision because the outcome of everyalternative choice is known. Risk a situation in which the manager is able toestimate the likelihood (probability) of outcomesthat result from the choice of particularalternatives.Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-25 26. Exhibit 7-8: Expected ValueCopyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-26 27. Decisions Under Uncertainty Limited information prevents estimation ofoutcome probabilities for alternatives . Limited information forces managers to relyon intuition, hunches, and gut feelings. Maximax: the optimistic managers choice to maximizethe maximum payoff. Maximin: the pessimistic managers choice tomaximize the minimum payoff. Minimax: the managers choice to minimize maximumregret.Copyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rights reserved 7-27 28. Exhibit 7-9: Payoff MatrixCopyright 2012 Pearson Education,Inc. Publishing Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter as Prentice Hall 2012 Pearson Education, Inc. All rig

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