Daft AISE Chp06 Final

8/8/2019 Daft AISE Chp06 Final

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6-1

Managerial DecisionMaking and Information

Technology

Copyright 2006 by South-Western, a division of Thomson Learning. All rights reserved.

Chapter 6


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2006 by South-Western, a division of Thomson Learning. All rights reserved. 6-2

Learning Objectives1. Explain why decision making is an important component of

good management.

2. Explain the difference between programmed and non

programmed decisions and the decision characteristics of

risk, uncertainty, and ambiguity.

3. Describe the classical, administrative, and political models

of decision making and their applications.

4. Identify the six steps used in managerial decision making.


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Learning Objectives (contd.)5. Explain four personal decision styles used by managers.

6. Discuss the advantages and disadvantages of participative

decision making.

7. Identify techniques for improving decision making in

todays turbulent environment.

8. Describe the importance of information technology (IT) for

organizations and the attributes of quality information.


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Decisions and Decision Making A decision is a choice made from available

alternatives.

Decision making is the process of identifying

problems and opportunities and then resolving

them.


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Types of Decisions

Programmed decisions

situations that occur often enough to enable

decision rules to be developed.

Nonprogrammed decisions

are made in response to situations that areunique, are poorly defined and largely

unstructured.


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Decision Making Conditions

Certainty

all the information the decision maker needs is

fully available.

Risk

decision has clear-cut goals.

good information is available.

future outcomes associated with each

alternative are subject to chance.


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Decision Making Conditions (contd.) Uncertainty

managers know which goals they wish to

achieve.

information about alternatives and future

events is incomplete.

managers may have to come up with creative

approaches to alternatives.


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Decision Making Conditions (contd.) Ambiguity

by far the most difficult decision situation.

goals to be achieved or the problem to be

solved is unclear.

alternatives are difficult to define.

information about outcomes is unavailable.


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Ex. 6.1 Conditions That Affect the Possibility of

Decision Failure

Organizational

Problem

Problem

Solution

Low HighPossibility of Failure

Certainty Risk Uncertainty Ambiguity

Programmed

Decisions

Nonprogrammed

Decisions


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Three Decision Making Models

Classical Model

Administrative Model

Political Model


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Selecting a Decision Making Model

Depends on the managers personal

preference. Whether the decision is programmed or non-

programmed.

Extent to which the decision is characterized

by risk, uncertainty, or ambiguity.


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Classical Model

Based on economic assumptions

Is considered to be normative


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Assumptions of the Classical Model Accomplishes goals that are known and agreed

upon.

Strives for certainty by gathering complete

information.

Criteria for evaluating alternatives are known.

Decision maker is rational and uses logic.


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Administrative Model How managers actually make decisions in situations

characterized by non-programmed decisions, uncertainty,

and ambiguity.

Two concepts are instrumental in shaping the administrative

model.

bounded rationality: means that people have limits or boundaries

on how rational they can be.

satisficing: means that decision makers choose the first solutionalternative that satisfies minimal decision criteria.


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Political Model Closely resembles the real environment in

which most managers and decision makers

operate.

Decisions are complex.

Disagreement and conflict over problems

and solutions are normal.

Coalition building is important.


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Ex. 6.2 Characteristics of Classical, Administrative,

and Political Decision-Making Models

Classical Model Administrative Model Political Model

Clear-cut problem and goals.

Condition of certainty.

Full information about

alternatives and their outcomes.

Rational choice by individual

for maximizing outcomes.

Vague problem and goals.

Condition of uncertainty.

Limited information about

alternatives and their outcomes.

Satisficing choice for resolving

problem using intuition.

Pluralistic; conflicting goals.

Condition of uncertainty/ambiguity.

Inconsistent viewpoints; ambiguous

information.

Bargaining and discussion among

coalition members.


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Ex. 6.3 Six Steps in the Managerial Decision-Making Process


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Diagnosis Questions(Kepner & Tregoe)

What is the state of disequilibrium affecting us?

When did it occur?

Where did it occur?

How did it occur?

To whom did it occur?

What is the urgency of the problem?

What is the interconnectedness of events? What result came from what activity?


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Ex. 6.5 Personal Decision Framework

Situation:

Programmed/non-programmed

Classical, administrative,political

Decision steps

Decision Choice:

Best Solution to Problem

Personal Decision Style:

Directive

AnalyticalConceptual

Behavioral


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The Vroom-Jago ModelThe Model

Helps gauge the appropriate amount of participation for

subordinates.

LeaderParticipation Styles

Five styles available, depending on the situation.

Participation in decision making ranging from highly

autocratic to highly democratic.


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Participation in Decision Making

Diagnostic Questions

Decision significance

Importance of commitment

Leader expertise Likelihood of commitment

Group support for goals

Group expertise

Team competence


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Information Technology

The hardware, software, telecommunications,database management, and other technologiesused to store data and make them available inthe form of information for organizationaldecision making.


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Ex. 6.8 Characteristics ofHigh-Quality Information

Time

Timeliness

Currency

FrequencyTime Period

Content

Accuracy

Relevance

Completeness

ConcisenessScope

Performance

Form

Clarity

Detail

Order

PresentationMedia

Source: Adapted from James A. OBrien,

Introduction to Information Systems, 8th ed. (Burr

Ridge, Ill, Irwin, 1997),284-285.


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Ex. 6.9 Types of Information SystemsOperations Information Systems

Transaction-processing systems.

Process control systems.

Office automation systems.

Management Information Systems

Information-reporting systems.

Decision support systems.

Executive information systems.

Groupware.


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Ex. 6.10 Basic Elements of Management Information Systems

Operations

Information

Systems

Management

Information

Systems

Reporting

Systems

Decision

Support

Systems

Executive

Information

Systems

Groupware

Systems

Corporate

and

External

Databases

SOURCE: Adapted from Ralph M. Stair and George W. Reynolds, Principles

of Information Systems: A Managerial Approach, 4th ed. (Cambridge, Mass.:

Course Technology, 1999), 391.


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Management and Technology

Implications

Improved employee effectiveness.

Increased efficiency.

Empowered employees.

Information overload.

Enhanced collaboration.

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