Post on 13-Dec-2015
transcript
© 2003 Pearson Education Canada Inc.
LEARNING OBJECTIVES You should be able to:
– Outline the steps in the decision-making process– Explain why decision-making ability is so important for
a manager– Describe the rational decision maker– Contrast the perfectly rational and bounded rationality
approaches to decision making– Explain the role that intuition plays in the decision-
making process
6.26.2
© 2003 Pearson Education Canada Inc.
LEARNING OBJECTIVES (continued)
You should be able to: (continued)
– Identify the two types of decision problems and the two types of decisions that are used to solve them
– Differentiate the decision conditions of certainty, risk, and uncertainty
– Describe the different decision-making styles
6.36.3
© 2003 Pearson Education Canada Inc.
DECISION MAKING
• Decisions– Choices from two or more alternatives– All organizational members make decisions
• Decision-Making Process– Step 1 - Identifying a Problem
• problem - discrepancy between an existing and a desired state of affairs
6.46.4
© 2003 Pearson Education Canada Inc.
DECISION MAKING (continued)• Decision-Making Process (continued)
– Step 2 - Identifying Decision Criteria• decision criteria - what’s relevant in making a
decision
– Step 3 - Allocating Weights to the Criteria• must weight the criteria to give them appropriate
priority in the decision
– Step 4 - Developing Alternatives• list the viable alternatives that could resolve the
problem without evaluating them
6.56.5
© 2003 Pearson Education Canada Inc.
DECISION MAKING (continued)• Decision-Making Process (continued)
– Step 5 - Analyzing Alternatives• each alternative is evaluated against the criteria
– Step 6 - Selecting an Alternative• choosing the best alternative from among those
considered
– Step 7 - Implementing the Decision• implementation - conveying the decision to those
affected by it and getting their commitment to it
– Step 8 - Evaluating Decision Effectiveness• determine whether the problem is resolved
6.66.6
© 2003 Pearson Education Canada Inc.
THE DECISION-MAKING PROCESS
Identifying a Problem
Identifying the Decision
Criteria
Allocating Weights
To Criteria
•Price•Manufacturer and model•Warranties•Support•Reliability•Repair Record•Reliability•Service•Warranty Period•On-site Service •Price•Case Style
1085543
My salesrepresentatives
need newcomputers.
6.36.3
6.76.7
Exhibit 6.1
© 2003 Pearson Education Canada Inc.
DevelopingAlternatives Fujitsu AST
Sharp IBM HP TI
NEC
AnalyzingAlternatives NEC
AST
HP
Fujitsu
IBM
Sharp
TI
Selecting anAlternative
ImplementingDecision
Evaluation ofDecision Effectiveness
•Reliability•Service•Warranty Period•On-site Service •Price•Case Style
The Fujitsuis the best.
Compaq
Compaq
6.86.8
Exhibit 6.1(continued)
ASSESSED VALUES OF NOTEBOOK COMPUTER ALTERNATIVES AGAINST DECISION CRITERIA
(Exhibit 6.3)
6.96.9© 2003 Pearson Education Canada Inc.
EVALUATION OF LAPTOP COMPUTER ALTERNATIVES AGAINST CRITERIA AND
WEIGHTS (Exhibit 6.4)
6.106.10© 2003 Pearson Education Canada Inc.
© 2003 Pearson Education Canada Inc.
THE MANAGER AS DECISION MAKER
• Rational Decision Making– Decisions are consistent, value-maximizing choices
within specified constraints– Managers assumed to make rational decisions– Assumptions of Rationality - decision maker would:
– be objective and logical– carefully define a problem– have a clear and specific goal– select the alternative that maximizes the likelihood of
achieving the goal– make decision in the firm’s best economic interests
• Managerial decision making seldom meets all the tests6.126.12© 2003 Pearson Education Canada Inc.
© 2003 Pearson Education Canada Inc.
“Good Enough”versus
Optimizing
LacksComplete
Information
CannotAssess All
Alternatives
CannotWeigh
All Criteria
BoundedRationality
6.136.13
THE MANAGER AS DECISION MAKER (continued)
• Bounded Rationality– Behave rationally within the parameters of a
simplified decision-making process that is limited by an individual’s ability to process information
– Accept solutions that are “good enough”– Escalation of commitment - increased commitment
to a previous decision despite evidence that it may have been wrong
6.146.14© 2003 Pearson Education Canada Inc.
THE MANAGER AS DECISION MAKER (continued)• Role of Intuition
– Intuitive decision making - subconscious process of making decisions on the basis of experience and accumulated judgment
• does not rely on a systematic or thorough analysis of the problem
• generally complements a rational analysis
6.156.15© 2003 Pearson Education Canada Inc.
WHAT IS INTUITION?Managers makedecisions basedon experience
Managers makedecisions basedon feelings and
emotions
Managers makeDecisions basedon ethical values
or culture
Managers makedecisions based
on subconscious
data
Manager makedecisions based
on skills,knowledge,or training
Intuition
Affect-initiateddecisions
Experienced-based decisions
Values orethics-based
decisions
Subconsciousmental
processing
Cognitive-based
decisions
6.166.16© 2003 Pearson Education Canada Inc.
THE MANAGER AS A DECISION MAKER (continued)
• Types of Problems and Decisions– Well-Structured Problems - straightforward, familiar,
and easily defined– Programmed Decisions - used to address structured
problems• procedure - series of interrelated sequential steps used to
respond to a structured problem• rule - explicit statement of what to do or not to do• policy - guidelines or parameters for decision making
6.176.17© 2003 Pearson Education Canada Inc.
THE MANAGER AS A DECISION MAKER (continued)• Types of Problems and Decisions
(continued)– Poorly-Structured Problems - new, unusual
problems for which information is ambiguous or incomplete
– Non-programmed Decisions - used to address poorly- structured problems
– few decisions in the real world are either fully programmed or non-programmed
6.186.18© 2003 Pearson Education Canada Inc.
TYPES OF PROBLEMS, TYPES OF DECISIONS, AND LEVEL IN THE
ORGANIZATION (Exhibit 6.8)
ProgrammedDecisions
Non-programmedDecisions Level in
Organization
Top
LowerWell structured
Poorly structured
Type ofProblem
6.196.19© 2003 Pearson Education Canada Inc.
THE MANAGER AS A DECISION MAKER (continued)• Decision-Making Conditions
– Certainty - outcome of every alternative is known
– Risk - able to estimate the probability of outcomes stemming from each alternative
– Uncertainty - not certain about outcomes and unable to estimate probabilities
6.206.20© 2003 Pearson Education Canada Inc.
THE MANAGER AS A DECISION MAKER (continued)
• Decision-Making Styles– Two dimensions define the approach to decision making
• way of thinking - differs from rational to intuitive• tolerance for ambiguity - differs from a need for consistency
and order to the ability to process many thoughts simultaneously
– Define four decision-making styles• Directive - fast, efficient, and logical• Analytic - careful and able to adapt or cope with new situations• Conceptual - able to find creative solutions• Behavioural - seek acceptance of decisions
6.216.21© 2003 Pearson Education Canada Inc.
DECISION-MAKING STYLES (Exhibit 6.12)
Analytic
Directive Behavioural
Rational Intuitive
Way of Thinking
Conceptual
High
Low
Tol
eran
ce f
or A
mb
igu
ity
6.226.22© 2003 Pearson Education Canada Inc.
MANAGING WORKFORCE DIVERSITY
• Diversity in Decision Making– Advantages - diverse employees:
• provide fresh perspectives• offer differing interpretations of problem definition• increase the likelihood of creative and unique solutions
– Disadvantages - diverse employees:• require more time to reach a decision• may have problems of communication• may create a more complex, confusing, and ambiguous
decision-making process• may have difficulty in reaching agreement
6.236.23© 2003 Pearson Education Canada Inc.
OVERVIEW OF MANAGERIAL DECISION MAKING (Exhibit 6.13)
Decision-MakingProcess
Types of Problems and Decisions• Well-structured
- programmed• Poorly structured
- non-programmed
Decision-Making Conditions• Certainty
• Risk• Uncertainty
Decision Maker Style• Directive• Analytic
• Conceptual• Behavioural
Decision-Making Approach• Rationality
• Bounded Rationality• Intuition
Decision• Choose best alternative - maximizing - good enough• Implementing• Evaluating
6.246.24© 2003 Pearson Education Canada Inc.