Principles of Management
AresLeila
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2
Decision making is the
process of
identifying
opportunities
Decision is a
choice made
from
available
alternatives
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
❖ Programmed Decisions
❖Recurring problems
❖Apply rule
❖ Nonprogrammed Decisions
❖Unique situations
❖Poorly defined
❖Unstructured
❖Important consequences
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© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
❖ Difference between programmed and
unprogrammed decisions
❖ Certainty – Situation in which all information
is fully available
❖ Risk – Future outcomes associated with an
alternative are subject to chance
❖ Uncertainty - Depends on the amount and
value of information available
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© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
❖ Ambiguity - Making decisions in difficult
situations
❖The goals and the problem are unclear
❖ Wicked decisions involve conflict over goals
and have changing circumstances, fuzzy
information, and unclear links
❖There is often no “right” answer
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❖ Rational economic assumptions drive
decisions
❖Operates to accomplish established goals,
problem is defined
❖Decision maker strives for information and
certainty, alternatives evaluated
❖Criteria for evaluating alternatives is known;
select alternative with maximum benefit
❖Decision maker is rationale and uses logic
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❖ Administrative/descriptive approach
❖How managers really make decisions
❖Recognize human and environmental
limitations
❖ Bounded rationality – People have limits or boundaries on how rational they can be
❖ Satisficing – Decision makers choose the first solution that satisfies minimal decision
criteria
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❖ Goals are often vague
❖ Rational procedures are not always used
❖ Managers’ searches for alternatives are
limited
❖ Most managers settle for satisficing
❖ Intuition – Quick apprehension of situation based on practice and experience
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❖ Decisions involve managers with diverse
interests
❖ Managers must engage in coalition
building
❖Informal alliance to support specific goal
❖ Without a coalition, powerful groups can
derail the decision-making process
❖ Political model resembles the real
environment
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❖ Assumptions of the political model
❖Organizations are made up of groups with
diverse interests, goals, and values
❖Information is ambiguous and incomplete
❖Lack of time, resources, or mental capacity
to process all information regarding a
problem
❖Decisions are the result of bargaining and
discussion among coalition members
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© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
❖ Recognition of Decision Requirement – Identify problem or opportunity
❖ Diagnosis and Analysis – Analyze underlying causal factors
❖ Develop Alternatives – Define feasible alternatives
❖ Selection of Desired Alternative – Alternative with most desirable outcome
❖ Implementation of Chosen Alternative – Use of managerial, administrative, and persuasive abilities to execute chosen alternative
❖ Evaluation and Feedback – Gather information about effectiveness
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© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
❖ Directive style – People who prefer simple, clear-cut solutions to problems
❖ Analytic style – Managers prefer complex solutions based on a lot of data
❖ Conceptual style – Managers like a broad amount of information
❖ Behavioral style – Managers with a deep concern for others
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❖ Being influenced by initial impressions
❖ Justifying past decisions
❖ Seeing what you want to see
❖ Perpetuating the status quo
❖ Being influenced by problem framing
❖ Overconfidence
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❖ Mechanisms to help reduce bias-related
decision errors:
❖ Start with brainstorming
❖ Use hard evidence
❖ Engage in rigorous debate
❖ Avoid groupthink
❖ Know when to bail
❖ Do a postmortem
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