Professional Documents
Culture Documents
2 Types of Decisions
3 Bounded Rationality
2 DECISION MAKING
DECISION
3 DECISION MAKING
DECISION MAKING
4 DECISION MAKING
WHAT TYPE OF DECISIONS
MANAGERS MAKE?
TOP FIRST
MIDDLE
LEVEL LINE
MANAGE
MANAGE MANAGE
RS
RS RS
Decide about Decide about Setting daily or
organizations setting production weekly production
goals. schedule. schedule.
Where to locate Handling problems
Allocating pay
manufacturing that arise.
facilities?
raises.
Deciding about
What new markets
Disciplining machines and
to move into? employees. equipments
What products/ maintenance
services to offer? schedules.
5 DECISION MAKING
TYPES OF DECISIONS
1. PROGRAMMED DECISIONS
6 DECISION MAKING
TYPES OF DECISIONS
2. NON-PROGRAMMED DECISION:
7 DECISION MAKING
DECISION MAKING MODELS
CLASSICAL MODEL
A prescriptive approach to decision making based
on the assumption that the decision maker can
identify and evaluate all possible alternatives and
their consequences and rationally choose the most
appropriate course of action.
8 DECISION MAKING
DECISION MAKING MODELS
CLASSICAL MODEL
9 DECISION MAKING
DECISION MAKING MODELS
ADMINISTRATIVE MODEL
An approach to decision making that explains why
decision making is inherently uncertain and risky
and why managers usually make satisfactory
rather than optimum decisions.
10 DECISION MAKING
DECISION MAKING MODELS
ADMINISTRATIVE MODEL
Based on 3 concepts:
Bounded rationality
Incomplete Information
Satisficing
11 DECISION MAKING
DECISION MAKING MODELS
ADMINISTRATIVE MODEL
Bounded Rationality Behavior that is
rational within the parameters of a
simplified decision making process, which
is limited (or bounded) by an individuals
ability to process information.
12 DECISION MAKING
DECISION MAKING MODELS
ADMINISTRATIVE MODEL
Incomplete Information
13 DECISION MAKING
DECISION MAKING PROCESS
Recognize the need for a
Decision
Generate Alternatives
Analysis of Alternatives
Legal Ethical Economical
Practical
Selection of an Alternative
Implementation of an Alternative
Evaluation of Decision
Effectiveness/ Learn from
Feedback
14 DECISION MAKING
DECISION MAKING HEURISTICS
AND BIASES
15 DECISION MAKING
DECISION MAKING HEURISTICS
AND BIASES
Overconfidence
Prior Hypothesis Bias
Representativeness
Illusion of Control
Escalation of Commitment
16 DECISION MAKING
ORGANIZATIONAL LEARNING
AND CREATIVITY
The process through which managers seek to
improve employees desire and ability to
understand and manage the organization and its
task environment.
17 DECISION MAKING
ORGANIZATIONAL LEARNING
AND CREATIVITY
Promoting Individual Creativity
Promoting Group Creativity
Brainstorming
Nominal Group Technique
Delphi Technique
18 DECISION MAKING
ENTREPRENEURSHIP AND
CREATIVITY
ENTREPRENEURSHIP & INTRAPRENEUR
Entrepreneur Who notices opportunities and
decides how to mobilize the
resources necessary to produce new and improved
goods and services.
19 DECISION MAKING
ENTREPRENEURSHIP AND
CREATIVITY
CHARACTERISTICS OF ENTREPRENEUR
Openness to experience
Internal Locus of Control
High Level of Self-Esteem
High Need for Achievement
Stress Management
20 DECISION MAKING
ENTREPRENEURSHIP AND
CREATIVITY
ENTREPRENEURSHIP AND MANAGEMENT
Entrepreneurship is NOT the same as Management.
21 DECISION MAKING