1. Copyright ©2015 Pearson Education, Inc.4-1 Chapter 3 Foundations of Decision Making

2. Learning Outcomes Describe the decision-making process. Explain the three approaches managers can use to make decisions. Describe the types of decisions and decision- making conditions managers face. Copyright ©2015 Pearson Education, Inc.4-2

3. Learning Outcomes (cont.) Discuss group decision-making. Discuss contemporary issues in managerial decision making. Copyright ©2015 Pearson Education, Inc.4-3

4. Copyright ©2015 Pearson Education, Inc.4-4 4.1 Describe the decision-making process.

5. How Do Managers Make Decisions? Copyright ©2015 Pearson Education, Inc.4-5

6. Identifying a Decision Problem Problem: a discrepancy between an existing and a desired state of affairs. Copyright ©2015 Pearson Education, Inc.4-6

7. Identifying Decision Criteria Relevant Factors: Price Model Size Manufacturer Options Repair record Copyright ©2015 Pearson Education, Inc.4-7

8. Weighting Criteria 1.Most important criterion assigned a weight of 10. 2.Other weights assigned against this standard. Copyright ©2015 Pearson Education, Inc.4-8

9. Developing Alternatives 4-9Copyright ©2015 Pearson Education, Inc.

10. 4-10 Analyzing Alternatives

11. Copyright ©2015 Pearson Education, Inc.4-11 Selecting the Best Alternative

12. Implementing the Decision Decision implementation: putting a decision into action. Copyright ©2015 Pearson Education, Inc.4-12

13. Evaluating the Decision Appraising the outcome of the decision: Was the problem resolved? Copyright ©2015 Pearson Education, Inc.4-13

14. Common Errors Copyright ©2015 Pearson Education, Inc.4-14

15. Copyright ©2015 Pearson Education, Inc.4-15 4.2 Explain the three approaches managers can use to make decisions.

16. Three Approaches Used to Make Decisions: Types of Decisions 4-16Copyright ©2015 Pearson Education, Inc.

17. Rational Model Rational decision making: choices that are consistent and value-maximizing within specified constraints. Copyright ©2015 Pearson Education, Inc.4-17

18. Bounded Rationality Satisfice Escalation of commitment Copyright ©2015 Pearson Education, Inc.4-18

19. Intuitive Decision Making Copyright ©2015 Pearson Education, Inc.4-19

20. Copyright ©2015 Pearson Education, Inc.4-20 4.3 Describe the types of decisions and decision-making conditions that managers face.

21. Types of Problems 1.Structured problem 2.Unstructured problem Copyright ©2015 Pearson Education, Inc.4-21

22. Types of Decisions Programmed: Repetitive decisions that can be handled using a routine approach. Copyright ©2015 Pearson Education, Inc.4-22

23. Types of Decisions (cont.) Nonprogrammed: Repetitive decisions that can be handled using a routine approach Copyright ©2015 Pearson Education, Inc.4-23

24. Problems, Decision Types, and Organizational Levels Copyright ©2015 Pearson Education, Inc.4-24

25. Decision-Making Conditions Certainty Risk Uncertainty Copyright ©2015 Pearson Education, Inc.4-25

26. Copyright ©2015 Pearson Education, Inc.4-26 4.4 Discuss group decision-making.

27. How Do Groups Make Decisions? Decisions are often made by groups representing the people who will be most affected by those decisions. Committees Task forces Review panels Work teams Copyright ©2015 Pearson Education, Inc.4-27

28. Advantages of Group Decision Making More complete information Diversity of experiences/perspectives More alternatives generated Increased acceptance of solution Increased legitimacy Copyright ©2015 Pearson Education, Inc.4-28

29. Disadvantages of Group Decision Making Time-consuming Minority domination Ambiguous responsibility Pressures to conform Copyright ©2015 Pearson Education, Inc.4-29

30. Groupthink When a group exerts extensive pressure on an individual to withhold his or her different views in order to appear to be in agreement. What it does How it occurs How to minimize it Copyright ©2015 Pearson Education, Inc.4-30

31. When Are Groups Most Effective? Individual Faster decision making More efficient use of work hours Group More accurate decisions More creative More heterogeneous representation Greater acceptance of final solution Copyright ©2015 Pearson Education, Inc.4-31

32. Improving Group Decision Making Make group decisions more creative by: 1.Brainstorming 2.The nominal group technique 3.Electronic meetings Copyright ©2015 Pearson Education, Inc.4-32

33. Copyright ©2015 Pearson Education, Inc.4-33 4.5 Discuss contemporary issues in managerial decision making.

34. Contemporary Issues National culture influences the way decisions are made and the degree of risk involved. Copyright ©2015 Pearson Education, Inc.4-34

35. Contemporary Issues Creativity lets the decision maker: Understand a problem more fully See problems others can’t Identify all viable alternatives Copyright ©2015 Pearson Education, Inc.4-35

36. Contemporary Issues Design thinking: approaching management problems as designers approach design problems Copyright ©2015 Pearson Education, Inc.4-36

37. Contemporary Issues Big data The vast amounts of quantifiable information that can be analyzed by highly sophisticated data processing. Copyright ©2015 Pearson Education, Inc.4-37

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