1. INTRODUCTION TO MANAGEMENT
Subarjo Joyosumarto SE, MA, Ph.D
23 Januari 2017
Meeting 3: Overview of Meeting 2
Chapter 7. Decision-Making

2. Overview of Meeting 2

3. Facts on global environment
LANGUAGE it is not unusual for citizen of different countries to speak more than one language FOOD Food consumed around the world are similar TRAVEL Citizen from a nation tends to travel across the globe easily BUSINESS Input and output of goods and services are processed in variety of economic centers

4. REGIONAL TRADING ALLIANCES
NAFTA North America Free Trade Agreement:
U.S.A, Canada, Mexico; Elimination of barriers to free trade strengthen the economic power of 3 continents
EURO The European Union:
The 12 regional members motivated to reassert the economic position against the U.S. and Japan
THE ASEAN ECONOMIC CUMMUNITY the ten nations allows good, skilled workers and capital move freely among member countries

5. MANAGING IN GLOBAL ENVIRONMENT
THE POLITICAL / LEGAL ENVIRONMENT The stability of politics and laws allows the accurate predictions. Managers must stay informed of the specifics laws in countries where they do business THE ECONOMIC ENVIRONMENT Global managers must be aware of economic issues when doing business in other countries. It is important to understand the type of economic system, it is free market or planned economy THE CULTURAL ENVIRONMENT Managing today talented global workforce can be challenged. The employee productivity is different from country to country. Japan and Korea usually have very high productivity and competitive manner

6. FIVE DIMENSION OF NATIONAL CULTURE

7. FIVE DIMENSION OF NATIONAL CULTURE

8. CHAPTER 7. DECISION-MAKING

9. DECISION-MAKING PROCESS1.
Identifying a Problem 8.
Evaluating Decision Effectiveness 2.
Identifying a Decision Criteria
THE DECISION MAKING PROCESS 7.
Implementing the Alternative 3.
Allocating weights to Criteria 6.
Selecting an Alternative 4.
Allocating weights to Criteria 5.
Analyzing Alternatives
DECISION : a choice among two or more alternatives

10. DECISION-MAKING PROCESS
Step 1: Identifying Problem
Problem :
Is a discrepancy between existing and desired condition
Becomes an obstacle that makes it difficult to achieve desired goals or purpose
Managers have to identify :
What's happening
Why it happens 10 1.
Identifying a Problem 2.
Identifying a Decision Criteria 3.
Allocating weights to Criteria 4. 5.
Analyzing Alternatives 6.
Selecting an Alternative 7.
Implementing the Alternative 8.
Evaluating Decision Effectiveness
THE DECISION MAKING PROCESS
DECISION : a choice among two or more alternatives
Eg. Amanda is a sales manager
Sales have declined, the laptops have been outdated and inadequate for doing their jobs
Her group need new laptops

11. DECISION-MAKING PROCESS
Step 2: Identifying Decision Criteria
Decision criteria is criteria that defines what’s important or relevant to resolving a problem
E.g. Amanda identifies that for the laptops:
storage capabilities,
display quality,
battery life,
warranty,
carrying weight
are relevant criteria in her decision 11 1.
Identifying a Problem 2.
Identifying a Decision Criteria 3.
Allocating weights to Criteria 4. 5.
Analyzing Alternatives 6.
Selecting an Alternative 7.
Implementing the Alternative 8.
Evaluating Decision Effectiveness
THE DECISION MAKING PROCESS
DECISION : a choice among two or more alternatives

12. DECISION-MAKING PROCESS12 1.
Identifying a Problem 2.
Identifying a Decision Criteria 3.
Allocating weights to Criteria 4. 5.
Analyzing Alternatives 6.
Selecting an Alternative 7.
Implementing the Alternative 8.
Evaluating Decision Effectiveness
THE DECISION MAKING PROCESS
DECISION : a choice among two or more alternatives
Step 3: Allocating Weights To The Criteria
The relevant criteria aren’t equally important, the decision maker must weigh the items in order to give them the correct priority in the decision
E.g. Amanda gives weight to the criteria as follows:
Memory and storage 10
Battery life 8
Carrying weight 6
Warranty 4
Display Quality 3

13. DECISION-MAKING PROCESS13 1.
Identifying a Problem 2.
Identifying a Decision Criteria 3.
Allocating weights to Criteria 4. 5.
Analyzing Alternatives 6.
Selecting an Alternative 7.
Implementing the Alternative 8.
Evaluating Decision Effectiveness
THE DECISION MAKING PROCESS
DECISION : a choice among two or more alternatives
Step 4: Developing Alternatives
Decision maker makes a list of viable alternatives that could resolve the problem.
The alternatives are only listed, not evaluated yet
E.g. Amanda makes a lists of alternatives:
Company
Memory and storage
Battery life
Carrying weight
Warranty
Display quality
HP ProBook 10 3 8 5
Dell Inspirion 7 6
Lenovo
Apple

14. DECISION-MAKING PROCESS14 1.
Identifying a Problem 2.
Identifying a Decision Criteria 3.
Allocating weights to Criteria 4. 5.
Analyzing Alternatives 6.
Selecting an Alternative 7.
Implementing the Alternative 8.
Evaluating Decision Effectiveness
THE DECISION MAKING PROCESS
DECISION : a choice among two or more alternatives
Step 5: analyzing Alternatives
Evaluate each one alternative, by using criteria established in step 3, multiply by weight on step 4
E.g. Amanda makes a lists:
Company
Memory and storage
Battery life
Carrying weight
Warranty
Display quality
Total
HP ProBook
100 24 60 32 15
231
Dell Inspirion 56 48 21
249
Lenovo 80 40 42 30
232
Apple

15. DECISION-MAKING PROCESS15 1.
Identifying a Problem 2.
Identifying a Decision Criteria 3.
Allocating weights to Criteria 4. 5.
Analyzing Alternatives 6.
Selecting an Alternative 7.
Implementing the Alternative 8.
Evaluating Decision Effectiveness
THE DECISION MAKING PROCESS
DECISION : a choice among two or more alternatives
Step 6: Selecting an Alternative
Choose the best alternative or the one that generated the highest total in step 5
E.g. Amanda choose the Dell inspiron because it score highest among all other alternatives (249 total)

16. DECISION-MAKING PROCESS16 1.
Identifying a Problem 2.
Identifying a Decision Criteria 3.
Allocating weights to Criteria 4. 5.
Analyzing Alternatives 6.
Selecting an Alternative 7.
Implementing the Alternative 8.
Evaluating Decision Effectiveness
THE DECISION MAKING PROCESS
DECISION : a choice among two or more alternatives
Step 7: Implementing the Alternative
Make the decision in step 6 into action, by conveying it to those affected and getting their commitment to it.
Make sure that people participate in the process and support it.
Re-asses the environment for any changes, especially if it is a long-term decision

17. DECISION-MAKING PROCESS17 1.
Identifying a Problem 2.
Identifying a Decision Criteria 3.
Allocating weights to Criteria 4. 5.
Analyzing Alternatives 6.
Selecting an Alternative 7.
Implementing the Alternative 8.
Evaluating Decision Effectiveness
THE DECISION MAKING PROCESS
DECISION : a choice among two or more alternatives
Step 8: Evaluating Decision Effectiveness
Evaluate the outcome or results of the decision to see whether the problem was resolved
If the evaluation shows that the problems still exist, the manager needs to assess what went wrong
The answer might lead the manager to redo an earlier step (back to step one)

18. MANAGERS MAKING DECISIONS
Planning
What are the organization’s long term objectives?
What strategies will best achieve those objectives?
What should the organization short term objectives be?
How difficult should individual goals be?
Organizing
How many employees should I have report directly to me?
How much centralization should there be in the organization?
How should jobs be designed?
When should the organization implement a different structure?
Leading
How do I handle employees who appear to be unmotivated?
What is the most effective leadership style in a given situation?
How will a specific change affect worker productivity?
When is the right time to stimulate conflict
Controlling
What activities in the organization need to be controlled?
How should those activities be controlled?
When is a performance deviation significant?
What type of management information system should the organization have?

19. MAKING DECISIONS: RATIONALITY BOUNDED RATIONALITY
Choices that are logical, consistent and maximize value
BOUNDED RATIONALITY
Choices that are rational, but limited by an individual’s ability to process information
THE ROLE OF INTUITION
Decision on the basis of experience, feeling and accumulate judgement
The role of experience evidence-based management (EBMgt)
The systematic use of the best available evidence to improve management practice

20. THE ROLE OF INTUITION

21. TYPES OF DECISIONS STRUCTURED PROBLEMS AND PROGRAMED DECISIONS
Structural problems: straightforward, familiar and easily defined problems
Programing decisions: repetitive decisions that can be handled by a routine approach
UNSTRUCTURED PROBLEMS AND NONPROGRAMMED DECISIONS
Unstructured problems: problems that are new or unusual and for which information is ambiguous or incomplete
Nonprogrammed decisions: unique and non-recurring decisions that require a custom-made situation

22. DECISION MAKING CONDITIONS
CERTAINTY
a situation when a manager can make accurate decisions because all outcomes are known
RISK
a situation in which the decision maker is able to estimate the likehood of certain outcomes
UNCERTAINTY
a situation in which a decision maker has neither certainty nor reasonable probability estimate available

23. DECISION-MAKING STYLES
LINEAR-NONLINEAR THINKING STYLE
Linear thinking style:
Decision style characterized by a person’s preference for using external and facts and processing this information through rational logical thinking
Non-linear thinking style:
Decision style characterized by a person’s preference for internal sources of information and processing this information with internal insights, feelings and hunches

24. DECISION-MAKING ERROR AND BIASES

25. OVERVIEW OF DECISION MAKING

26. QUESTIONS FOR DISCUSSIONS
Why is decision making often described as the essence of a manager’s job?
Describe the eight steps in the decision making process.
Compare and contrast the four ways managers make decisions.
Explain the two types of problems and decisions. Contrast the three decision- making conditions.
All of us bring biases to the decisions we make. What would be the drawback of having biases? Could there be any advantages to having biases? Explain what are the implication for managerial decision making
Would you call yourself a linear or nonlinear thinker? What are the decision- making implications of these labels? What are the implication for choosing where you want to work?
Is there a difference between wrong decision and bad decisions? Why do good managers sometimes make wrong decisions? Bad decision? How can managers improve their decision-making skills?

27. Thank You