DECISION MAKING Chapter 5 with Duane Weaver

Outline Decision Making Process Making Decisions Decision Making Conditions Decision Making Styles

Decision Making Process 1.Identify Problem 2.Identify Decision Criteria 3.Allocate Weights to Criteria 4.Develop Alternatives 5.Analyze Alternatives 6.Select Alternative 7.Implement Alternative 8.Evaluate Decision Effectiveness 9.Reiterate as Necessary

Making Decisions Rationality – fully objective and logical. Assumes decisions made in best interests of the organization. Hmmm? Bounded Rationality – managers make rational decisions limited by their ability to process information. Tend to “satisfice” rather than maximize (what is “good enough”) Intuition – making decisions on the basis of experience, feelings, and accumulated judgement. Gut feeling.

Decision Making Conditions Certainty – a condition in which a decision maker can maker accurate decisions because of the outcome of every alternative is known. Risk – a condition in which a decision maker is able to estimate or assess the likelihood of certain outcomes. (risk assessment) Uncertainty – the choice of the alternative is influenced by the limited amount of information available to the decision maker and their psychological orientation. (optimist = maximax, pessimist = maximin, minimize the maximum regret = minimax)

Decision Making Styles Directive – low tolerance for ambiguity and are rational. Analytic – greater tolerance for ambiguity. Conceptual – very broad in their outlook and look at many alternatives. (even expand or extrapolate). Behavioural – low tolerance for ambiguity and an intuitive way of thinking. Avoid conflict.

Decision Making Styles Exercise: –In your teams, identify a manager for each of the decision making styles that you may have worked for, know, or have observed. –Describe the benefits and disadvantages of each style by providing an example of what they did.

Thank You