Professional Documents
Culture Documents
Chapter 3
The Nature of Managerial Decision-Making
and resolve problems and capitalize on opportunities. The process by which a course of action is selected as the way to deal with a specific problem.
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have a major impact on personal and organizational lives. Other decisions are more routine but still require that we select an appropriate course of action.
7
Monitoring and evaluating
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Non-Programmed Decisions
Decisions made in response to situations that are unique and unstructured. Required creativity and innovative to elicit a list of reasonable alternatives courses of action e.g. New management tried to restructured company
Decision-Making Conditions
1.
~
~
Certainty
Managers have accurate, measurable and reliable information about the outcome of various alternatives under consideration. Decision-maker knows exactly what is happening :
The nature of the problem Possible alternatives Result of alternatives
2.
~ ~ ~
Risk
Future conditions that are not always known Information is available but is not enough Condition under risk :
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Decision-Making Conditions
3.
~ ~
Uncertainty
Force unpredictable external conditions (Politics; Economy; Social; Technology; Environment; Legal @ PESTEL) Lack of information Little is known about the alternatives or their outcomes.
Models of Decision-Making
RATIONAL-ECONOMIC MODEL Prescriptive model (suggested how decision should be made) BASIC PREMISE Decision making will be rational, systematic and logical ASSUMPTIONS OF RATIONAL ECONOMIC MODEL Complete and accurate information is available Agreed-on objectives and list of alternative courses of action Decision makers work for the organizations best interest No ethical dilemmas arise in the decisionmaking process RATIONAL-ECONOMIC MODEL Descriptive model (suggested how decision are actually made) BASIC PREMISE Human limitations make rational decision making difficult to achieve ASSUMPTIONS OF RATIONAL ECONOMIC MODEL Bounded rationality affects decision-making process Experience-based intuition will affect the decision-making process Decision makers will accept a satisfactory decision Escalation of commitment may occur
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Models of Decision-Making
DRAWBACKS OF THE RATIONAL-ECONOMIC MODEL
In practice, the model may not always be a realistic depiction of
limited in their ability to comprehend and process vast amounts of information. Decision makers seldom have adequate knowledge about future consequences of alternatives. Personal factors such as fatigue, emotions, attitudes, motives of behaviors intervene to prevent a decision maker from always acting in a completely rational manner. Individual culture and ethical values will influence the decision process.
What is Group?
Two or more persons interacting for some purpose and who influence one another in the process.
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Group Decision-Making
Group decision-making is becoming more common as organizations focus on improving customer service and push decision-making to lower levels.
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Groupthink***
An agreement-at-any-cost mentality that results in ineffective
group decision-making. Conformity in thought and behavior among the members of a group, especially an unthinking acceptance of majority opinions Occurs when group are :
~ Highly cohesive ~ Have highly directive leaders ~ Insulated so they have no clear ways to get objective
information ~ Because they lack outside information > have little hope that a better solution might be found than the one proposed by the leader or other influential group members
Groupthink***
Characteristics Illusions of invulnerability Collective rationalization Belief in the morality of group-decisions Self-censorship Illusion of unanimity in decision-making Pressure on members who express arguments Types of Defective Decisions Incomplete survey of alternatives Incomplete surveys of goals Failure to examine risks of preferred decisions Poor information search Failure to reappraise alternatives Failure to develop contingency plans.
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members to generate as many more novel ideas as possible on a given topic without evaluating them. ~ Rules of Brainstorming
i. ii. iii. iv. v. vi.
Freewheeling is encouraged Group members will not criticize ideas as they are being generated Quality is encouraged The wilder the ideas the better Playback on previously stated ideas No ideas are evaluated until after all alternatives are generated.
making where agreement is lacking or the members have incomplete knowledge concerning the nature of the problem
Delphi Technique
~ Uses experts to make predictions and forecasts about the future
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END OF CHAPTER 3
NOTES BY : NURFAIZAH BINTI SAHIMI