Chapter 5: Decision Making Flashcards
Decision making is a process of
Identifying problems
Opportunities
And then resolving them
Decision making is
Making a choice
Among available alternatives
Goods decisions are the heart of
Good management
Decisions determine how an organisation
Solves its problems
Allocates its resources
Accomplished its objectives
Management is synonymous with
Decision making
What stages of management involve decision making?
All POLC
The types of decisions are made
Programmed
Non programmed
Programmed decisions are
Routine
Simple
Made to tackle frequently recurring problems and opportunities
Programmed decision involve situations
That have occurred often enough
To enable a definitive approach to be developed
And applied in the future
Decision rules are
Procedures
Managers formulate procedures so
Subordinates can make the decision
They are freed to do important tasks
Programmed decision is done on the
First-line level
Non programmed decisions are
Unique
No cut and dried method for handling the problem
Non programmed decisions need a
Customs tailored treatment
Conditions under which decisions are made differ in
Degree of certainty
The certainty of decision making is based on
Availability of information
Possibility of failure / outcome (based on info and alternatives)
Clarity of goals
The 4 possible situations of decision making are
Certainty
Risk
Uncertainty
Ambiguity
In certainty,
All information is fully available
The outcome from every alternative is known
In risk,
Decision making has clear cut goals
Good information is available. Enough to estimate probability of success
Future outcomes associated with each alternative are subject to chance of loss or failure
In uncertainty,
Managers know which objective they want to achieve
Information about alternatives is incomplete
Future events is based on the creativity of managers
In ambiguity,
Goals to be achieved are unclear
Alternatives are difficult to define
Information about outcomes is unavailable
The steps in decision making are
Recognition of decision requirement Diagnosis and analysis of causes Development of alternatives Selection of desired alternatives Implementation of chosen alternative Evaluation and feedback
Managers confront a decision requirement when
There is either a problem or opportunity
Awareness of a problem or opportunity requires a
Scan of internal and external environment
Information about a problem or opportunity can come from
Performance reports
Financial reports
Managers identify the cause of
Problem and opportunity
The analyze the situation more deeply by asking
5W
1H
Alternative solutions are developed to
Respond to needs of the situation
Correct causes
Managers select the alternative that best meets his
Decision criteria
The decision criteria has to fit
Overall goals and values of the organisation
Achieve the desired results
The success of chosen alternative depends on
Whether it is translated to action
Managers gather information to answer
How well was decision implemented
Was decision effective in achieving its objective
What are the decision biases?
Being influenced by initial impressions Justifying past decisions Seeing what you want to see Perpetuating the status quo Being influenced by problem framing Overconfidence
How are people influenced by initial impressions?
Too much weight given to first information received
First impressions act as anchors to subsequent judgement
Justifying past decisions creates danger of
Decision escalation
Past decisions can be
No longer valid
Seeing what you want to see is
Selective perception
In selective perception,
People are biased towards information that supports
their POV, existing instincts
Avoid information that contradicts
Perpetuating the status quo involves
Used what works in the past as the basis
Perpetuating status quo leads to failure to
Explore new options
Search for additional information
Investigate new technologies
Problem framing is
How we define the problem. It could be wrong
Overconfidence is
Overestimating of abilities to predict and understand risk
decisions can be made individually or
In groups
The advantages of group decision making are
Broader perspective
More alternatives can be evaluated
Reduces uncertainty about alternatives
Provides member support for decision
Broader perspective is provided for
Defining the problem
Diagnosing underlying causes and effects
More alternatives can be evaluated through
Groups offering more knowledge and facts
Identify potential solutions
Produce more decision alternatives
There is greater memeber support because
People who participate will be more satisfied with decision
And likely to support It
The disadvantages of group decision making are
Time consuming Wasted resources if used for programmed decisions Compromise decisions may satisfy no one Groupthink No focus for decision responsibility
Group decision making is time consuming because
People must be consulted
Jointly diagnose problems
Discuss solutions
Compromise decisions are
Less than optimal for organisation
Groupthink is a
Mode of thinking people engage in
When in a cohesive group
Not able to realistically appraise alternative courses of action
There is no focus for decision responsibility as well
The group makes a decision instead of an individual
Uncertainty is reduced about alternatives through
Group discussion
