Decision Making
the process by which managers respond to opportunities and threats by analyzing options, and making determinations about specific organizational goals and courses of action
Programmed Decision
a routine, virtually automatic decision making that follows established rules or guidelines-managers have made the same decision many times before-little ambiguity involved
Non-Programmed decisions
a nonroutine decision making that occurs in response to unusual, unpredictable opportunities and threats
Intuition
feelings, beliefs, and hunches that come readily to mind, require little effort and information gathering and result in on-the-spot decisions
Reasoned Judgement
decisions that take time and effort to make and result from careful information gathering, generation of alternatives, and evaluation of alternatives
Classical Model of Decision Making
a prescriptive model of decision making that assumes the decision maker can identify and evaluate all possible alternatives and their sequences and rationally choose the most appropriate course of action
Steps of Classical Model of Decision Making
1.

list all possible alternatives & consequences2. rank each alternative from least preferred to most preferred3. select the alternative that leads to desired future outcome

Administrative Model of Decision Making
-an approach to decision making that explains why decision making is inherently uncertain and risky and why managers usually make satisfactory rather than optimum decisions-bounded rationality, incomplete information, satisfying
Bounded Rationality
cognitive limitations that constrain one's ability to interpret, process, and act on information
Incomplete Information
-uncertainty and risk-ambiguous information-time costs and information costs
Ambiguous Information
information that can be interpreted in multiple and often conflicting ways
Time constraints and information costs
managers have neither the time nor money to search ll possible alternatives and evaluate potential consequences
Satisficing
Searching for and choosing an acceptable, or satisfactory response to problems and opportunities, rather than trying to make the best decisionManagers explore a limited number of options and choose an acceptable decision rather than the optimum
Six Steps in Decision Making
Step 1: recognize the need for a decisionStep 2: generate alternativesStep 3: assess alternativeStep 4: choose among alternativesStep 5: implement the chosen alternativeStep 6: learn from feedback
Decision-Making StepsStep 1
Recognize need for a decision-sparked by an event such as environment changes-managers must first realize that a decision must be made
Step 2
Generate alternatives-managers must develop feasible alternative course of action-if good alternatives are missed, the resulting decision is poor-it is hard to develop creative alternatives, so managers need to look for new ideas
Step 3
Assess alternatives-advantages and disadvantages of each alternative-managers should specify criteria, then evaluate
General Criteria for Evaluating Possible Courses of Action
Is the possible course of action-legal?-ethical?-economical?-practical?
Step 4
Choose among alternatives-rank the various alternatives and make a decision-tendency is for managers to ignore critical information, even when available
Step 5
Implement Chosen Alternative-managers must now carry out the alternative-often a decision is made and not implemented-making one decision begins a cycle of future decisions
Step 6
Learn From Feedback-compare what happened to what was expected to happen-explore why any expectations for the decision were not met-derive guidelines that will help in future decision making
Disadvantage of Group Decision Making
Group Think
Group Think
a pattern of faculty and biased decision making that occurs in groups whose members strive for agreement among themselves at the expense of accurately assessing information relevant to a decision
Devil's Advocacy
Critical analysis of a preferred alternative, made in response to challenges raised by a group member who, playing the role of devil's advocate, defends unpopular or opposing alternatives for the sake of argument
Optimum Decision
The most appropriate decision in light of what managers believe to be the most desirable consequences for the organization
Organizational learning
The process through which managers seek to improve employees desire and ability to understand and manage the organization and its task enviornment
Creativity
A decision maker's ability to discover original and novel ideas that lead to feasible alternative courses of action
innovation
the implementation of creative ideas in an organization
Brainstorming
a group problem solving technique in which managers meet face to face to generate and debate a wide variety of alternatives from which to make decisions
product champion
a manager who takes ownership of a project and provides the leadership and vision that take product from the idea stage to the final customer
skunkworks
a group of entrepreneurs who are deliberately separated from the normal operation of an organization to encourage them to devote all their attention to developing new products