1. Chapter 8 Fundamentals of Decision Making Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002

2. Learning Objectives After reading this chapter, you should be able to:  Explain the role of decision making for managers and employees  State the conditions under which individuals make decisions  Describe the characteristics of routine, adaptive, and innovative decisions  Explain the features of three basic models of decision making 8.1

3. Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002 Conditions Under Which Decisions Are Made Adapted from Figure 8.1 CertaintyUncertainty Objective probabilitiesSubjective probabilities Risk 8.2

4. Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002 Framework for Decision Making Adapted from Figure 8.2 Known and well defined Unusualandambiguous Types of Problems Innovative decisions Adaptive decisions Routine decisions Risk Uncertainty Certainty Conditions under which decisions are made Types of Solutions Untried and ambiguous 8.3

5. Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002 Benefits of Continuous Improvement 1) Enhanced customer value through new and improved products and services 2) Reduction in errors, defects, and waste 3) Increased responsiveness changes in customer expectations 4) Increased productivity and effectiveness in the use of resources 8.4

6. Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002 Phase 2: Set goals Phase 3: Search for alternative solutions Rational Decision Making Model Phase 1: Define and diagnose the problem Adapted from Figure 8.3 Phase 4: Compare and evaluate alternative solutions Phase 5: Choose among alternative solutions Phase 6: Implement the solution selected Phase 7: Follow up and control External and internal environmental factors and stakeholders 8.5

7. Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002 Factors Influencing a Satisficing Decision Adapted from Figure 8.4 Information Processing Biases Limited search Limited information 8.6 Satisficing decision Perceived problem Triggers Leads to

8. Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002 Political Model of Decision Making Adapted from Figure 8.5 Divergence In Problem Definition Divergence in goals Divergence in Solutions 8.7 Political Decision Making Multiple Stakeholders with Power Triggers Leads to