Chapter 2 (c) Flashcards
What are the key decision areas for managers under planning?
- What are the organization’s long-term objectives?
- What strategies will best achieve those objectives?
- What should the organization’s short-term objectives be?
- How difficult should individual goals be?
What are the key decision areas for managers under organizing?
- How many employees should report directly to me?
- How much centralization should there be in the organization?
- How should jobs be designed?
- When should the organization implement a different structure?
What are the key decision areas for managers under leading?
- How do I handle employees that appear to be unmotivated?
- What is the most effective leadership style in a given situation?
- How will a specific change affect worker productivity?
- When is the right time to stimulate conflict?
What are the key decision areas for managers under controlling?
- What activities in the organization need to be controlled?
- How should those activities be controlled?
- When is a performance deviation significant?
- What type of management information system should the organization have?
What is rational decision-making?
Choices that are logical, consistent, and maximize value.
What are the assumptions of rational decision-making?
- Rational decision maker is logical and objective.
- The problem is clear and unambiguous.
- The decision maker has a clear, specific goal and is aware of all alternatives and consequences.
- The alternative that maximizes achieving the goal is selected.
- Decisions are made in the best interest of the organization.
What is bounded rationality?
Decision-making that’s rational but limited by an individual’s ability to process information.
What does it mean to satisfice?
Accepting solutions that are “good enough.”
What is escalation of commitment?
An increased commitment to a previous decision despite evidence it may have been wrong.
What is intuitive decision-making?
Making decisions based on experience, feelings, and accumulated judgment.
What is evidence-based management (EBMgt)?
The systematic use of the best available evidence to improve management practices.
What are structured problems?
Straightforward, familiar, and easily defined problems.
What are programmed decisions?
Repetitive decisions that can be handled by a routine approach.
What are the types of programmed decisions?
- Procedure: A series of sequential steps for responding to a well-structured problem.
- Rule: An explicit statement of what can or cannot be done.
- Policy: A guideline for making decisions.
What are unstructured problems?
New or unusual problems with ambiguous or incomplete information.
What are nonprogrammed decisions?
Unique, nonrecurring decisions that require custom-made solutions.
What are the three decision-making conditions?
- Certainty: All outcomes are known, allowing accurate decisions.
- Risk: The likelihood of certain outcomes can be estimated.
- Uncertainty: Neither certainty nor reasonable probability estimates are available.
How can managers manage risk in decision-making?
By using historical data or secondary information to assign probabilities to different alternatives and calculating expected value.
What is expected value?
The expected return from each possible outcome, calculated by multiplying expected revenue by the probability of each alternative.
What are heuristics?
Rules of thumb that simplify decision-making in complex or uncertain situations.
What is the potential downside of using heuristics?
They can lead to errors and biases in processing and evaluating information.
What is overconfidence bias?
Holding unrealistically positive views of oneself and one’s performance.
What is immediate gratification bias?
Choosing alternatives that offer immediate rewards and avoid immediate costs.
What is the anchoring effect?
Fixating on initial information and ignoring subsequent information.
What is selective perception bias?
Interpreting events based on the decision maker’s biased perceptions.
What is confirmation bias?
Seeking information that reaffirms past choices while discounting contradictory information.
What is framing bias?
Highlighting certain aspects of a situation while ignoring others.
What is availability bias?
Losing objectivity by focusing on the most recent events.
What is representation bias?
Drawing false analogies and seeing identical situations where none exist.
What is randomness bias?
Creating unfounded meaning from random events.
What are sunk cost errors?
Forgetting that current actions cannot influence past events and should only relate to future consequences.
What is self-serving bias?
Taking credit for successes and blaming outside factors for failures.
What is hindsight bias?
Believing after an event that it could have been predicted beforehand.
What are the guidelines for making effective decisions?
- Understand cultural differences.
- Create standards for good decision-making.
- Know when it’s time to call it quits.
- Use an effective decision-making process.
- Develop your ability to think clearly.
What are the characteristics of an effective decision-making process?
- Focuses on what’s important.
- Is logical and consistent.
- Blends subjective and analytical thinking with intuitive thinking.
- Requires only the necessary information to resolve the dilemma.
- Encourages gathering relevant information.
- Is straightforward, reliable, easy-to-use, and flexible.
What is design thinking in decision-making?
An approach to management problems modeled after how designers solve design problems.
What is big data in decision-making?
The vast amount of quantifiable data analyzed using sophisticated data processing tools to support decision-making.
Why is analyzing data for data’s sake a wasted effort?
Because collecting and analyzing data must serve a specific decision-making purpose to be effective.
