Chapter 3: Information and Decision-Making Please note that in order to use the embedded videos in this presentation, you must select “Enable Content” in your security settings for the file. Business Leadership: Management Fundamentals John R. Schermerhorn, Jr., Barry Wright, and Lorie Guest © John Wiley & Sons Canada, Ltd.

Managers as problem-solvers Problem solving: The process of identifying a ? between actual and desired performance and taking action to resolve it A decision: A ? among possible alternative course of action A performance ? : Actual performance being less than desired performance Actual performance being better than desired performance

Problem-solving approaches or styles Problem ? : Inactive in information gathering and solving problems Problem ? : Reactive in gathering information and solving problems Problem ? : Proactive in anticipating problems and opportunities and taking appropriate action to gain an advantage

Types of thinking Systematic Thinkers ? Intuitive Thinkers ? Multidimensional Thinkers Multidimensional thinking applies both ? thinking

Programmed decisions Apply solutions that are readily available from ? to solve structured problems Structured problems are ones that are ? with respect to information needs Best applied to ? problems that can be anticipated

Nonprogrammed decisions Develop novel solutions to meet the demands of unique situation that present unstructured problems Unstructured problems are ones that are full of ? and information ? Commonly faced by higher-level management

Crisis decision-making A crisis involves an ? that can lead to ? if not resolved quickly and appropriately Rules for crisis management: Figure out what is going on Remember that speed matters Remember that slow counts, too Respect the danger of the unfamiliar Value the skeptic Be ready to “fight fire with fire”

Decision environments Offer complete information about possible action alternatives and their outcomes Lack complete information about action alternatives and their consequences, but offer some estimates of probabilities of outcomes for possible action alternatives Information is so poor that probabilities cannot be assigned to likely outcomes of known action alternatives

Figure 3.7 Three environments for managerial decision-making and problem solving

Five-step decision-making process ?

Figure 3.8 Steps in managerial decision- making and problem solving

Decision-making process Step 1: Identify and define the problem Focuses on information ?, information ?, and deliberation Decision objectives should be established Common mistakes in defining problems: Defining the problem too broadly or too narrowly Focusing on symptoms instead of causes Choosing the wrong problem

Decision-making process Step 2: Generate and evaluate possible solutions Potential solutions are ? and more information is ?, data are ?, the ?and ?of alternative solutions are identified Approaches for evaluating alternatives: Stakeholder analysis Cost-benefit analysis

decision-making process Step 2: Generate and evaluate possible solutions (cont.) Criteria for evaluating alternatives: ? Common mistakes: Selecting a particular solution too ? Choosing a ? alternative that may have damaging side effects or may not be as good as other alternatives

Decision-making process Step 3: Decide on a preferred course of action Classical decision model Managers act rationally in a certain world Managers face clearly defined problems and have complete knowledge of all possible alternatives and their consequences Results in an optimizing decision

Decision-making process Step 3: Decide on a preferred course of action (cont.) Behavioural decision model Managers act in terms of what they perceive about a given situation Recognizes limits to human information-processing capabilities

Figure 3.9 Differences in the classical and behavioural models of managerial decision making

Decision-making process Step 4: Implement the decision solution Involves ? to make sure the solution decided upon becomes a reality Managers need to have ? and ? to ? action plans Lack-of-participation error should be avoided

Decision-making process Step 5: Evaluate results Involves comparing ? and ? results ? and ? consequences of chosen course of action should be examined If actual results fall short of desired results, the manager returns to earlier steps in the decision-making process