1. Chapter 4 Decision Making
Text Organizer Answers
Business Management 12
Stewart

2. Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
Copyright © 2011 Pearson Canada Inc. 2

3. Making Decisions Rationality Are fully objective, and logical
Managers make consistent, value-maximizing choices with specified constraints
It assumes rational decision makers:
Are fully objective, and logical
Will define the problem and have a specific goal
Will select the alternative that maximizes the organization’s interests not their own
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
Copyright © 2011 Pearson Canada Inc. 3

4. Making Decisions (cont’d)
Bounded Rationality
Managers make decisions rationally, but are limited by their ability to interpret, process, and act on information
Assumes decision makers:
Will not seek out or have knowledge of all alternatives
Managers satisfice rather than maximize
That is, they will accept a solution that is “good enough”
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
Copyright © 2011 Pearson Canada Inc. 4

5. Making Decisions (cont’d)
Intuitive Decision Making
Making decisions on the basis of experience, feelings, and accumulated judgment
Complements rational analysis often allowing a manager to act quickly with limited information
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
Copyright © 2011 Pearson Canada Inc. 5

6. Types of Problems and Decisions
Structured Problems
Have clear goals
Are familiar
Are easily defined
Programmed Decision
A repetitive decision that can be handled by a routine approach
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
Copyright © 2011 Pearson Canada Inc. 6

7. Problems and Decisions (cont’d)
Unstructured Problems
Are new or unusual
Information is ambiguous or incomplete
Nonprogrammed Decisions
Are unique and nonrecurring and require custom-made solutions
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
Copyright © 2011 Pearson Canada Inc. 7

8. Decision-Making Conditions
Certainty
Accurate decisions are possible because the outcome of every alternative is known
Risk
Decision maker estimates the likelihood of outcomes
Ability to weight outcomes is based on personal experiences or secondary information
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
Copyright © 2011 Pearson Canada Inc. 8

9. Decision-Making Conditions (cont’d)
Uncertainty
Limited information prevents estimation of outcome probabilities
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
Copyright © 2011 Pearson Canada Inc. 9

10. Decision-Making Styles
Directive
Use minimal information and consider few alternatives
Analytic
Make careful decisions in unique situations
Conceptual
Maintain a broad outlook and consider many alternatives in making long-term decisions
Behavioural
Work well with and seek acceptance by others and try to avoid conflict
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
Copyright © 2011 Pearson Canada Inc. 10

11. Group Decision Making Advantages Disadvantages
More complete information and knowledge
More diverse alternatives
Increases acceptance of a solution
Increases legitimacy of decision
Disadvantages
Time consuming
Opportunity for minority domination
Ambiguous responsibility
Pressures to conform
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
Copyright © 2011 Pearson Canada Inc. 11

12. Group Decision Making Groupthink
The withholding by group members of different views to appear to be in agreement
Quality decision making is jeopardized
Groupthink occurs when:
Group members rationalize resistance to the assumptions made
Members pressure those who doubt group views
Members with doubts avoid going against group consensus
If someone does not speak, it is assumed they are in agreement
Chapter 4, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
Copyright © 2011 Pearson Canada Inc. 12