Chapter 6 Flashcards
What is the definition of a decision?
- A decision is a choice made from available alternatives.
What is decision making?
- Decision making is the process of identifying problems and opportunities and then resolving them.
- Decision making involves effort both before and after the actual choice.
What is the difference between programmed and nonprogrammed decisions?
- Programmed decisions involve situations that have occurred often enough to enable decision rules to be developed and applied in the future.
- Nonprogrammed decisions are made in response to situations that are unique, are poorly defined and largely unstructured, and have important consequences for the organization.
In decision making, what is the meaning of certainty and uncertainty?
- Certainty means that all the information the decision maker needs is fully available.
- _Uncertainty _means that managers know which goals they wish to achieve, but information about alternatives and future events is incomplete.
In decision making, what is the meaning of risk?
- Risk means that a decision has clear-cut goals and that good information is available, but the future outcomes associated with each alternative are subject to some chance of loss or failure.
In decision making, what is the meaning of ambiguity?
- Ambiguity means that the goals to be achieved or the problem to be solved is unclear, alternatives are difficult to define, and information about outcomes is unavailable.
What is a “wicked decision problem?”
- Wicked decisions are associated with conflicts over goals and decision alternatives, rapidly changing circumstances, fuzzy information, unclear links among decision elements, and the inability to evaluate whether a proposed solution will work.
- For wicked problems, there often is no “right” answer.
The classical model of decision making is considered to be normative. What does normative mean in this context?
- _Normative _means it defines how a decision maker should make decisions.
- It does not describe how managers actually make decisions so much as it provides guidelines on how to reach an ideal outcome for the organization.
When is it most appropriate to use the classical model of decision making?
- The classical model is most useful when applied to programmed decisions and to decisions characterized by certainty or risk because relevant information is available and probabilities can be calculated.
The administrative model is considered to be descriptive. What does descriptive mean in this context?
- _Descriptive _means that it describes how managers actually make decisions in complex situations rather than dictating how they should make decisions according to a theoretical ideal.
Two concepts are important in the administrative decision making model: bounded rationality and satisficing. Explain these two concepts.
- Bounded rationality means that people have limits, or boundaries, on how rational they can be. Organizations are incredibly complex, and managers have the time and ability to process only a limited amount of information with which to make decisions.
- Satisficing means that decision makers choose the first solution alternative that satisfies minimal decision criteria.
Intuition is also associated with the administrative decision making model. What does it mean in this context?
- _Intuition _represents a quick apprehension of a decision situation based on past experience but without conscious thought.
- Intuitive decision making is not arbitrary or irrational because it is based on years of practice and hands-on experience.
When is it appropriate to use the administrative decision making model?
- The administrative decision making model should be used in difficult situations, such as those characterized by nonprogrammed decisions, uncertainty, and ambiguity, managers are typically unable to make economically rational decisions even if they want to.
When is it appropriate to use the political model of decision making?
- The political model of decision making is useful for making nonprogrammed decisions when conditions are uncertain, information is limited, and there are manager conflicts about what goals to pursue or what course of action to take.
In the political model of decision making, managers often engage in coalition building. What is a coalition and what is coalition building?
- A _coalition _is an informal alliance among managers who support a specific goal.
- Coalition building is the process of forming alliances among managers. In other words, a manager who supports a specific alternative, such as increasing the corporation’s growth by acquiring another company, talks informally to other executives and tries to persuade them to support the decision.
What are the four basic assumptions of the political decision making model?
- Organizations are made up of groups with diverse interests, goals, and values. Managers disagree about problem priorities and may not understand or share the goals and interests of other managers.
- Information is ambiguous and incomplete. The attempt to be rational is limited by the complexity of many problems, as well as personal and organizational constraints.
- Managers do not have the time, resources, or mental capacity to identify all dimensions of the problem and process all relevant information. Managers talk to each other and exchange viewpoints to gather information and reduce ambiguity.
- Managers engage in the push and pull of debate to decide goals and discuss alternatives. Decisions are the result of bargaining and discussion among coalition members.
What are the six steps in the managerial decision-making process?
- recognition of decision requirement
- diagnosis and analysis of causes
- development of alternatives
- selection of desired alternative
- implementation of chosen alternative
- evaluation and feedback
What is the difference between a problem and an opportunity in decision making?
- A _problem _occurs when organizational accomplishment is less than established goals. Some aspect of performance is unsatisfactory.
- An _opportunity _exists when managers see potential accomplishment that exceeds specified current goals. Managers see the possibility of enhancing performance beyond current levels.
In decision making, what is involved in the diagnosis step?
- _Diagnosis _is the step in the decision-making process in which managers analyze underlying causal factors associated with the decision situation.
In decision making, what is risk propensity?
- Risk propensity is the willingness to undertake risk with the opportunity of gaining an increased payoff.
What is involved in the implementation stage of managerial decision making?
- The implementation stage involves the use of managerial, administrative, and persuasive abilities to ensure that the chosen alternative is carried out.
What are the four main decision styles managers may use?
- directive
- analytical
- conceptual
- behavioral
What are the characteristics of the directive style of decision making?
- The directive style is used by people who prefer simple, clear-cut solutions to problems.
- Managers who use this style often make decisions quickly because they do not like to deal with a lot of information and may consider only one or two alternatives.
What are the characteristics of the analytical style of decision making?
- Managers with an analytical style of decision making like to consider complex solutions based on as much data as they can gather.
- These individuals carefully consider alternatives and often base their decisions on objective, rational data from management control systems and other sources.
What are the characteristics of the conceptual style of decision making?
- People who tend toward a conceptual style of decision making also like to consider a broad amount of information.
- They are more socially oriented than those with an analytical style and like to talk to others about the problem and possible alternatives for solving it.
What are the characteristics of the behavioral style of decision making?
- The behavioral style of decision making is often the style adopted by managers having a deep concern for others as individuals.
- Managers using this style like to talk to people one-on-one, understand their feelings about the problem, and consider the effect of a given decision on them.
What are the six biases that can affect a manager’s decision making?
- being influenced by initial impressions
- justifying past decisions
- seeing what you want to see
- perpetuating the status quo
- being influenced by emotions
- overconfidence
What is brainstorming and what are its limitations?
- _Brainstorming _uses a face-to-face interactive group to spontaneously suggest a wide range of alternatives for decision making.
- People in a group often want to conform to what others are saying. Others may be concerned about pleasing the boss or impressing colleagues. In addition, many creative people simply have social inhibitions that limit their participation in a group session or make it difficult to come up with ideas in a group setting.
What is involved in evidence-based decision making?
- Evidence-based decision making means a commitment to make more informed and intelligent decisions based on the best available facts and evidence.
- It means being alert to potential biases and seeking and examining the evidence with rigor.
Decision making biases might be reduced by using the devil’s advocate approach and the point-counterpoint approach? How do these approaches work?
- A devil’s advocate has the role of challenging the assumptions and assertions made by the group. The devil’s advocate may force the group to rethink its approach to the problem and avoid reaching premature conclusions.
- Point-counterpoint breaks a decision-making group into two subgroups and assigns them different, often competing, responsibilities. The groups then develop and exchange proposals and discuss and debate the various options until they arrive at a common set of understandings and recommendations.
Groupthink and the Abilene Paradox should be avoided in decision making. What are these forms of dysfunctional decision making?
- _Groupthink _refers to the tendency of people in groups to suppress contrary opinions. When people slip into groupthink, the desire for harmony outweighs concerns over decision quality.
- In an Abilene paradox a group of people collectively decide on a course of action that is counter to the preferences of many (or all) of the individuals in the group.
- It involves a common breakdown of group communication in which each member mistakenly believes that their own preferences are counter to the group’s and, therefore, does not raise objections.
Escalating commitment is a decision making problem that should be avoided. What is it?
- Escalating commitment occurs when anagers and organizations continue to invest time and money in a solution even when there is strong evidence that it is not appropriate.
It’s a good idea to do a postmortem or after action review when making decisions. What does this mean?
- A postmortem or an after-action review is a disciplined procedure whereby managers invest time to review the results of decisions on a regular basis and learn from them.
- After implementation of any significant decision, managers meet to evaluate what worked, what didn’t, and how to do things better.
What are the causes of the Abilene Paradox?
- Blame: identifying a scapegoat; it perpetuates the illusion that conflict is a problem
- Collusion: all group members are equal to blame
- Blaming the Leader: another form of collusion
What are remedies for the Abilene Paradox?
- Assess real risks: consider the risks of action vs. no action
- Own up to your beliefs: say what you really think
- Confront the group: state what the group has silently agreed upon
WRAP is an acronym for effective decision making. What does each letter stand for?
- Widen your options.
- Reality-test your assumptions.
- Attain distance before deciding.
- Prepare to be wrong.
