Chapter 9: Managerial Decision Making Flashcards
What is the classical decision making model?
The Classical Decision Making Model is a perspective in management that advocates for a systematic, logical approach to decision-making. It assumes that managers are fully rational, have complete information, and are able to make decisions that maximize organizational welfare. This model is based on the premise that every decision is rational and logically follows from available information, with a clear-cut goal of optimizing results.
What are the four assumptions of the classical decision making model?
Problem Clarity: Assumes that problems are clearly defined and facts about the situation are readily available and understandable.
Known Options: Presumes that all possible solutions and outcomes are known in advance.
Clear Preferences: Assumes that the decision-maker has a clear preference order among alternatives, with a consistent value system.
No Time or Cost Constraints: Assumes decision-making without constraints of time or finance, allowing for an extensive analysis to find the optimal solution.
What is the administrative decision making model?
The Administrative Decision Making Model, also known as the Bounded Rationality Model, posits that decision-making is often limited by various constraints, including insufficient information, cognitive limitations of the decision-maker, and time constraints. This model, introduced by Herbert Simon, suggests that managers often must make decisions in environments of uncertainty and complexity and thus resort to ‘satisficing’ rather than optimizing.
Whose work is the administrative decision making model based on?
The Administrative Decision Making Model is primarily based on the work of Herbert Simon. Simon argued that human beings are only partly rational and are rational within limits, or ‘bounded rationality.’ He challenged the traditional model of a perfectly rational agent, suggesting that decision-making is often constrained by many factors.
What does satisficing mean?
Satisficing, a term coined by Herbert Simon, is a decision-making strategy where individuals settle for an acceptable solution, rather than the optimal one, due to limitations in knowledge, time, cognitive capacity, and resources. It suggests that once a satisfactory threshold is met, further search for a better option is stopped.
What are the assumptions of the administrative decision making model?
Limited Information: Recognizes that decision-makers do not possess complete information and are often unaware of all possible alternatives.
Limited Rationality: Suggests that decision-makers, due to cognitive limitations, cannot process all available information and therefore cannot be perfectly rational.
Limited Time and Resources: Acknowledges that decision-making often occurs under the pressure of time and resource constraints.
Satisficing: Indicates that decision-makers often seek a solution that is good enough, rather than the best possible one, under the given constraints.
What is intuition?
Intuition in management refers to the ability to understand or know something immediately, without the need for conscious reasoning. It’s often based on years of experience and learning and is used particularly in situations where swift decisions are necessary, or there is a lack of sufficient data for a purely analytical approach.
What is Quasirationality?
Quasi Rationality in decision-making refers to a blend of rational analysis and other subjective factors, including emotions, intuition, and ethical considerations. It acknowledges that while rational analysis is important, decisions are often influenced by non-rational factors.
What does coalition mean?
A coalition in the context of management and organizational behavior refers to an alliance among individuals or groups, who come together to achieve a common goal, often in a political context. In decision-making, coalitions are formed to gain influence and power, and to push specific agendas or outcomes.
What is the political decision making model?
The Political Decision Making Model views organizational decision-making as a process influenced by power and politics. Decisions are seen as the outcome of bargaining, negotiation, and conflict resolution among individuals and groups with different interests, preferences, and values. This model highlights the role of power dynamics, organizational politics, and coalition building in decision-making.
What are the four assumptions of the political decision making model?
Diverse Interests: Assumes that different stakeholders have diverse and often conflicting interests.
Limited Resources: Acknowledges the scarcity of resources, which leads to competition and conflict among different groups.
Power and Influence: Emphasizes that decisions are significantly influenced by the power dynamics and political maneuvers of stakeholders.
Bargaining and Negotiation: Views decision-making as a process of negotiation and compromise between various stakeholders with differing interests.
What are the six steps in the managerial decision making process? Elaborate on each step.
Problem Identification: Identifying and defining the problem or opportunity clearly, setting the stage for the decision-making process.
Information Gathering: Collecting relevant data and information to understand the problem better. This includes both internal and external information and may involve qualitative and quantitative data.
Alternative Generation: Developing a range of possible solutions or courses of action. This involves creative thinking and considering multiple options.
Evaluation and Analysis: Analyzing the alternatives based on criteria such as feasibility, risks, benefits, and alignment with organizational goals. This step may involve cost-benefit analysis, risk assessment, and scenario planning.
Choice and Implementation: Making a decision on the best course of action and implementing it. This step also involves planning and allocation of resources.
Evaluation and Feedback: Assessing the results of the decision once implemented. This includes reviewing the outcomes against expectations, learning from successes and failures, and making adjustments if necessary.
What is permortem and postmortem?
Premortem: A proactive technique used in decision-making where a team imagines that a project has failed before it starts and works backward to determine what might lead to this failure. This anticipatory approach helps in identifying potential problems and mitigating risks.
Postmortem: A retrospective analysis conducted after a project’s completion. It involves examining what went right and wrong, learning from the experience, and applying these lessons to future projects. It’s crucial for continuous improvement and organizational learning.
