Management Information Systems

Mrs. Rosemarie M. Coronejo

Math-IT Dept, IAS, FEU

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 Describe the kinds of decisions you will face as
a manager
Summarize the steps in making rational
decisions
Recognize the pitfalls you should avoid when
making decisions
Evaluate the pros and cons of using a group to
make decisions

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 Identify procedures to use in leading a
decision-making group
Explain how to encourage creative decisions
Discuss the process by which decisions are
made in organizations
Describe how to make decisions in a crisis

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The business executive is by profession
a decision maker. Uncertainty is his
opponent. Overcoming it is his mission.

-John McDonald

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 The act of making up your mind about
something, or a position or opinion or
judgement reached after consideration.
The process of selecting from several choice,
products or ideas, and taking action.

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 Decision-making is not easy!
It must be done amid:
Ever-changing factors
Unclear information
Conflicting points of vews

Information may be unclear

May have deal with conflicting point of
view
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 Crisis
A serious difficulty requiring immediate action.
Non-Crisis
An issue that requires resolution but does not
simultaneously have the importance and
immediacy characteristics of a crisis.
Opportunity Problems
A situation that offers strong potential for
significant orgnizational gain if appropriate
actions are taken.
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Managerial Decision Making

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 Characteristics of Managerial
Decisions

Lack of Programmed decisions versus

structure nonprogrammed decisions
Uncertainty Certainty versus uncertainty versus risk
and risk

Conflict Psychological conflict versus conflict

between people

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Why Do Managers Sometimes Avoid
Making Decisions?
Managers cant be sure how much time,
energy, or trouble lies ahead
Getting involved is risky; tackling a
problem but failing to solve it can hurt a
managers track record
It is easier to procrastinate or get busy
with less demanding activities

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 Lack of Structure

Programmed decisions
Decisions encountered and made before,
having objectively correct answers, and
solvable by using simple rules, policies, or
numerical computations
Nonprogrammed decisions
New, novel, complex decisions having no
proven answers

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 Uncertainty and Risk
Certainty
Decision makers have accurate and comprehensive
information
Uncertainty
Decision makers have insufficient information
Risk
The probability of success is less than 100% and
losses may occur
Ambiguity
Unclear goals or problems; alternatives are
difficult to define; unavailable information about
the outcomes

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 Conflict

Conflict
Opposing pressures from different sources,
occurring on the level of psychological
conflict or of conflict between individuals or
groups
Decision makers experience psychological
conflict when several options are attractive, or
when none of the options is attractive
Conflict arises between people

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1. Identifying and diagnosing a problem
2. Generating alternative solutions
3. Evaluating alternatives
4. Making a choice or decision
5. Implementing the decision
6. Evaluating the decision

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 Identifying and Diagnosing
the Problem
Recognize a problem exists by
comparing the current state (the way
things are) to the desired state (the way
things ought to be
Past performance
Current performance
Future expected performance

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 Generating Alternative
Solutions
Ready-made solutions
Ideas that have been seen or tried before
Custom-made solutions
New, creative solutions designed
specifically or the problem

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 Evaluating Alternatives
Choosing the best solution
Is information complete and current? If not, can
we get more and better information?
Does the alternative meet our primary objective?
What problems could we have if we implement
the alternative?

Contingency plans are alternative courses of action

that can be implemented based on how the future
unfolds.

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 Making the Choice
Maximizing
Making the best possible decision
Satisfying
Choosing an option that is acceptable,
although not necessarily the best or perfect
Optimizing
Achieving the best possible balance among
several goals

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 Implementing the Decision
Those implementing the decision must
understand and be committed to its
successful implementation

Decision makers should assume

implementation will not go smoothly
Identify potential problems
Identify potential opportunities

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 Evaluating the Decision
Collecting information on how well the
decision is working

Decision information is useful whether

feedback is positive or negative.
Negative feedback means that either:
Implementation will require more time,
resources, effort, or thought
The decision was a bad one in which case
managers process back to the first stage and
redefine the problem
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 The Best Decision

Nothing can guarantee a best decision,

but managers should be confident they
followed proper decision-making
procedures

Vigilance occurs when the decision

maker carefully executes all stages of
decision making

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 Barriers to Effective Decision
Making
Why dont managers use rational
decision processes?
Improperly defined or misidentified goal
Too few solution alternatives generated
Poorly planned execution
Inadequate or nonexistent monitoring

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 Barriers to Effective Decision
Making
Psychological Biases that interfere with objective
biases rationality including the illusion of
control, framing effects, and
discounting the future

Time pressures The pressure to act quickly;

managers employ a variety of tactics
to manage time pressures
Social realities Interpersonal factors that decrease
decision-making effectiveness

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 Psychological Biases
Illusion of control
Peoples belief that they can influence events, even
when they have no control over what will happen

Framing effects
A psychological bias influenced by the way a
problem or decision alternative is phrased or
presented

Discounting the future

A bias weighting short-term costs and benefits
more heavily than longer-term costs and benefits
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 Tactics to Manage Time
Pressures
Focus on real-time information

Involve people more effectively and

efficiently in the decision-making
process

Take a realistic view of conflict

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 Decision Making in Groups

Two heads are better than one

Groups usually make higher quality

decisions than most individuals acting
alone

However, group decisions are often

inferior to the best individual decisions

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Decision Making in Groups

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 Decision Making in Groups
Potential Advantages Potential Disadvantages
More information One member may dominate
the discussion
Greater number of Satisficing is more likely
perspectives
Opportunity for intellectual Pressure to avoid
stimulation disagreement can lead to
groupthink
Participants likely to Goal displacement is more
understand why decision likely
was made
Higher level of More time consuming
commitment to decision
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Satisficing
Decision-makers select the first option that meets
a given need or select the option that seems to
address most needs rather than the "optimal"
solution.
Groupthink
A phenomenon that occurs in decision
making when group members avoid
disagreement as they strive for consensus
Goal Displacement
A condition that occurs when a decision-making
group loses sight of its original goal and a new,
less important goal emerges 29
 Managing Group Decision
Making
Leadership style
Minimize process-related problems
Avoid dominating the discussion
Encourage less-vocal group members to air
opinions and suggestions
Be alert to groupthink, satisficing, and goal
displacement

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 Managing Group Decision
Making
Constructive conflict helps avoid groupthink and uncreative solutions while
bringing out diverse viewpoints

Cognitive conflict Issue-based differences in perspectives or

judgments

Affective conflict Emotional disagreement directed toward other

people

Devils advocate A person who has the job of criticizing ideas to

ensure that their downsides are fully explored

Dialectic A structured debate comparing two conflicting

courses of action

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 Managing Group Decision
Making
Encouraging creativity
Give creative efforts the credit they deserve
Dont punish creative failures
Avoid extreme time pressures
Stimulate and challenge people intellectually
Listen to employees ideas
Put together groups with different styles of
thinking
Get your people in touch with customers
Protect your people from managers who demand
immediate payoffs
Be creative yourself
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 Managing Group Decision
Making
Brainstorming
A process in which group members
generate as many ideas about a problem as
they can
Criticism is withheld until all ideas have
been proposed

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 Learn from past decisions, but dont waste time
regretting past
Distinguish between idea getting and evaluating
(Dont be too critical when generating ideas.)
Seek advice, when practical
As a group leader, dont dominate the discussion
When possible, sleep on decisions, but dont wait
too long.

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