© 2010 South-Western, Cengage Learning, Inc. All rights reserved.

The Decision Making Process The act of choosing one alternative from among a set of alternatives. Decision-Making Process: Recognizing and defining the decision situation Identifying alternatives Choosing the “best” alternative Putting the alternative into practice © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

The Nature of Decision Making Decision-Making Process (cont’d) An effective decision optimizes some set of factors such as profits, sales, employee welfare, and market share. Managers make decisions about both problems and opportunities. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Types of Decisions Programmed Decision Nonprogrammed Decision is a fairly structured decision or one that recurs with some frequency or both. Example: Starting your car in the morning. Nonprogrammed Decision is relatively unstructured and occurs much less often a programmed decision. Example: Choosing a vacation destination. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Decision-Making Conditions Decision Making Under Risk Decision Making Under Uncertainty Decision Making Under Certainty Conditions Affecting Decision Making © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Behavioral Aspects of Decision Making Satisficing Bounded rationality Coalitions Escalation of commitment Intuition Risk propensity Influences on Decision Making © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Managerial Ethics and Decision Making Individual Ethics Managerial Ethics Employees Other economic agents Organizational Ethics © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Group and Team Decision Making Interacting group or team Delphi groups Nominal group Forms of Group Decision Making © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

Key Terms decision-making decision-making process programmed decision nonprogrammed decision state of certainty stage of risk state of uncertainty classical decision model steps in rational decision making administrative model bounded rationality satisficing coalition intuition escalation of commitment risk propensity interacting groups Delphi group nominal group groupthink © 2010 South-Western, Cengage Learning, Inc. All rights reserved.