Ch. 5: Decision Making, Learning, Creativity, and Entrepreneurship Flashcards
What is 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.
What is programmed decision making?
Routine, virtually automatic decision making that follows established rules or guidelines.
What is nonprogrammed decision making?
Nonroutine decision making that occurs in response to unusual, unpredictable opportunities and threats.
What is intuition?
Feelings, beliefs, and hunches that come readily to mind, require little effort and information gathering, and result in on-the-spot decisions.
What is reasoned judgment?
A decision that requires time and effort and results from careful information gathering, generation of alternatives, and evaluation of alternatives.
What is the classical decision-making model?
A prescriptive approach to decision making based on the assumption that the decision maker can identify and evaluate all possible alternatives and their consequences and rationally choose the most appropriate course of action.
What is an optimum decision?
The most appropriate decision in light of what managers believe to be the most desirable consequences for the organization.
What is the administrative model?
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.
What is bounded rationality?
Cognitive limitations that constrain one’s ability to interpret, process, and act on information.
Used to describe the situation in which the number of alternatives a manager must identify is so great and the amount of information so vast that it is difficult for the manager to even come close to evaluating it all before making a decision.
What is risk?
The degree of probability that the possible outcomes of a particular course of action will occur.
Why is information incomplete?
What is satisficing?
Searching for and choosing
an acceptable, or satisfactory, response to problems and opportunities, rather than trying to make the best decision.
What are the six steps in decision making?
What are the four steps in assessing alternatives?
- Legality: Managers must ensure that a possible course of action will not violate any domestic or international laws or government regulations.
- Ethicalness: Managers must ensure that a possible course of action is ethical and will not unnecessarily harm any stakeholder group. Many decisions managers make may help some organizational stakeholders and harm others. When examining alternative courses of action, managers need to be clear about the potential effects of their decisions.
- Economic feasibility: Managers must decide whether the alternatives are economically feasible—that is, whether they can be accomplished given the organization’s performance goals. Typically managers perform a cost–benefit analysis of the various alternatives to determine which one will have the best net financial payoff.
- Practicality: Managers must decide whether they have the capabilities and resources required to implement the alternative, and they must be sure that the alternative will not threaten the attainment of other organizational goals. At first glance, an alternative might seem economically superior to other alternatives; but if managers realize it is likely to threaten other important projects, they might decide it is not practical after all.
What does groupthink mean?
A pattern of faulty 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.
How is a learning organization made?
- For organizational learning to occur, top managers must allow every person in the organization to develop a sense of personal mastery. Managers must empower employees and allow them to experiment, create, and explore what they want.
- As part of attaining personal mastery, organizations need to encourage employees to develop and use complex mental models—sophisticated ways of thinking that challenge them to find new or better ways of performing a task—to deepen their understanding of what is involved in a particular activity. Here Senge argued that managers must encourage employees to develop a taste for experimenting and risk taking.
- Managers must do everything they can to promote group creativity. Senge thought that team learning (learning that takes place in a group or team) is more important than individual learning in increasing organizational learning. He pointed out that most important decisions are made in subunits such as groups, functions, and divisions.
- Managers must emphasize the importance of building a shared vision—a common mental model that all organizational members use to frame problems or opportunities.
- Managers must encourage systems thinking. Senge emphasized that to create a learning organization, managers must recognize the effects of one level of learning on another. Thus, for example, there is little point in creating teams to facilitate team learning if managers do not also take steps to give employees the freedom to develop a sense of personal mastery.
