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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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2 Decision making is the process of identifying opportunities Decision is a choice made from available alternatives
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Programmed Decisions Recurring problems Apply rule Nonprogrammed Decisions Unique situations Poorly defined Unstructured Important consequences 3
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Difference between programmed and unprogrammed decisions Certainty – Situation in which all information is fully available Risk – Future outcomes associated with an alternative are subject to chance Uncertainty - Depends on the amount and value of information available 4
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5
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Ambiguity - Making decisions in difficult situations The goals and the problem are unclear Wicked decisions involve conflict over goals and have changing circumstances, fuzzy information, and unclear links There is often no “right” answer 6
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Rational economic assumptions drive decisions Operates to accomplish established goals, problem is defined Decision maker strives for information and certainty, alternatives evaluated Criteria for evaluating alternatives is known; select alternative with maximum benefit Decision maker is rationale and uses logic Normative ─ how a decision maker should make a decision 7
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Administrative/descriptive approach How managers really make decisions Recognize human and environmental limitations Bounded rationality – People have limits or boundaries on how rational they can be Satisficing – Decision makers choose the first solution that satisfies minimal decision criteria 8
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Goals are often vague Rational procedures are not always used Managers’ searches for alternatives are limited Most managers settle for satisficing Intuition – Quick apprehension of situation based on practice and experience 9
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Decisions involve managers with diverse interests Managers must engage in coalition building Informal alliance to support specific goal Without a coalition, powerful groups can derail the decision-making process Political model resembles the real environment 10
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Assumptions of the political model Organizations are made up of groups with diverse interests, goals, and values Information is ambiguous and incomplete Lack of time, resources, or mental capacity to process all information regarding a problem Decisions are the result of bargaining and discussion among coalition members 11
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Recognition of Decision Requirement – Identify problem or opportunity Diagnosis and Analysis – Analyze underlying causal factors Develop Alternatives – Define feasible alternatives Selection of Desired Alternative – Alternative with most desirable outcome Implementation of Chosen Alternative – Use of managerial, administrative, and persuasive abilities to execute chosen alternative Evaluation and Feedback – Gather information about effectiveness 13
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Directive style – People who prefer simple, clear-cut solutions to problems Analytic style – Managers prefer complex solutions based on a lot of data Conceptual style – Managers like a broad amount of information Behavioral style – Managers with a deep concern for others 17
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Being influenced by initial impressions Justifying past decisions Seeing what you want to see Perpetuating the status quo Being influenced by problem framing Overconfidence 18
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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Mechanisms to help reduce bias-related decision errors: Start with brainstorming Use hard evidence Engage in rigorous debate Avoid groupthink Know when to bail Do a postmortem 19
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