The Managerial Decision Making

Chapter 1 The Managerial Decision MakingTHE DECISION–MAKING PROCESSDecision-Making Errors and BiasesDecision-Making ConditionsManagement functionsWhat is Decision Making : Decision Making is a process, not a simple act of choosing among alternatives.Meaning What is Problem: A discrepancy between an existing and a desired state of affairs.What is Implementing the Decision: Putting a decision into action.What is Identifying Decision Criteria : Relevant Factors: Price , Model , Size , Manufacturer , Options , and Repair record.typesWhat Is Intuition?HindsightSelective PerceptionAnchoring EffectImmediate Gratification ConfirmationOverconfidenceAvailabilityRandomnessRepresentationOverconfidenceFramingRevisionSelf-serving Sunk CostsTypes of DecisionsRiskCertaintyUncertaintyThe Tragedy of GroupthinkProblems Differ/ Type of ProblemsPLANNING Defining goals by establishing strategies and make action plans to coordinate activities.LEADING Directing and motivating all parties involved, also sorting out conflictsORGANIZING Decide what need to be done, how will it be done and who will do itCONTROLLING Monitoring activities to ensure they achieved as Planned.Rational decision making is choices that are consistent and value-maximizing within specified constraints.Satisfice is accepting soluting that are “good enough”.Bounded Rationality is making decisions that are rational within the limits of a manager’s ability to process information.Structured problemProblems, Decision Types, and Organizational LevelsUnstructured problemA situation in which a decision maker is able to estimate the likelihood of certain outcomesA situation in which a decision maker can make accurate decision because all outcomes are known.A situation in which a decision Maker has neither certainty nor reasonable probability estimates available.The decision maker can have clear picture of the problems, straightforward, familiar, easily defined and to completed it .They are new or unusual problems for which information is ambiguous or incomplete.ProgrammedNonprogrammedA repetitive decisions that can be handled using a routine approach.A unique and nonrecurring decision that requires a custom made solution.Group Decision MakingGroup decision-making is a situation faced when individuals collectively make a choice from the alternatives before them. The decision is then no longer attributable to any single individual who is a member of the group.Decisions are often made by groups representing the people who will be most affected by those decisions.CommitteesTask forcesReview panelsWork teams1.Advantages of Group Decision Makin2.Disadvantages of Group Decision MakingDiversity of experiences/perspectivesMore complete informationMore alternatives generatedIncreased acceptance of solutionIncreased legitimacyTime-consumingMinority dominationAmbiguous responsibilityPressures to conformWhen Are Groups Most Effective?Individual-Faster decision making-More efficient use of work hoursGroup-More accurate decisions-More creative-More heterogeneous representation-Greater acceptance of final solutionWhen 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 doesHinders decision making, possibly jeopardizing the quality of the decision by: - Undermining critical thinking in the group .- Affecting a group’s ability to objectively appraise alternatives.Deterring individuals from critically appraising unusual , minority, or unpopular views.How to minimize itEncourage cohesiveness.Foster open discussion Have an impartial leader who seeks input from all members.How it occursGroup members rationalize resistance to assumptions.Members directly pressure those who express doubts or question the majority’s views and arguments.Members who have doubts or differing points of view avoid deviating from what appears to be group consensus.An illusion of unanimity prevails.Full agreement is assumed if no one speaks up.Improving Group Decision MakingBrainstorming:An idea – generating process that encourages alternatives while withholding criticism.The nominal group technique:A decision making technique in which group members are physically present but operate independentlyElectronic meetings:A type of nominal group technique in which participants are linked by computerContemporary Issues in Managerial Decision Making.National culture:influences the way decisions are made and the degree of risk involved.Design thinking: approaching management problems as designers approach design problems.Creativity lets the decision maker:Understand a problem more fully See problems others can’t Identify all viable alternativesBig Data: the vast amounts Of quantifiable information that can be analyzed by highly sophisticated data processing
92