Decision Making Flashcards
Decision Making
This is the process of making choices among alternative courses of action, including inaction.
Levels of Decisions
Decision Making occurs through Strategic Decisions, Tactical Decisions and Operational Decisions.
Strategic Decision
This is decision making from the top management. It pertains to high level managerial activities such as mergers, diversification and divestment.
EX: HMV CEO
Tactical Decision
Middle Level management decisions regarding things such as improving sales, marketing a new product and employee training.
Ex: Rudy
Operational Decision
Decision making that pertains to all levels of employees, what should I say to the customer? Should I attend this Office Event
Ex: Me @ HMV
Types of Decisions
Programmed Decisions and Non Programmed Decisions
Programmed Decisions
These are decisions that frequently occur and require responses that stem from routine, they are called decisions rules.
For example, many restaurants face customer complaints as a routine part of doing business. Because this is a recurring problem for restaurants, it may be regarded as a programmed decision. To deal with this problem, the restaurant might have a policy stating that every time they receive a valid customer complaint, the customer should receive a free dessert
Non Programmed Decisions
These are choices that are not made everyday and require significant thought before action.
Example: McDonald’s became aware of a need to respond to growing customer concerns regarding foods high in fat and calories. This is a nonprogrammed decision because for several decades, customers of fast-food restaurants were more concerned with the taste and price of the food, rather than the healthiness.
Rational Decision Making Model
An 8 step model that is helpful in understanding how to make decisions and how decisions might be made. Some of the steps are complicated therefore analysis paralysis is a possibility.
RDM the 8 Steps
- Identify the Problem
- Establish Decision Criteria
- Weight Decision Choice
- Generate Alternative
- Evaluate Alternatives
- Choose the Best Alternative
- Implement the Decision
- Evaluate the Decision
I evaluate with great excellent, choose in excitement
Please Consider All Decisions
Satisficing
Accepting the first alternative that meets the minimum criteria
Bounded Rationality
The idea that it is not possible for us to select all of alternatives because we are human and are limited to a manageable set of alternatives with the absence of an exhaustive analysis.
Intuitive Decision Making
Using our past experience and expertise in order to make a decision in absence of all the information. You scan your environment for cues and act intuitively.
Advocacy Decision Making
In this type of decision, you are trying to advocate for your choice. You are not necessarily balancing the arguments or trying to improve your choice via collaboration, rather you are taking a selfish approach to promoting your agenda forward.
Ex: Cuban Missile Crisis
Inquiry Decision Making
This is when you try to make a decision based on the collaborative ideas and efforts of all those around, including people that are in opposition to you. In this type of decision making, you are trying to compromise and make the best points that benefit everybody the greatest. It stresses collaborate gain. This reminds me of Democratic Leadership
Ex: Airline Companys, They want to know what all sides think of there service
Challenges of Decision Making
Anchoring Availability Escalation of Commitment Fundamental Attribution Error Satisficing Over Confidence
Anchoring
Relying too heavily on irrelevant or singular information.
Ex: Focusing on the fact that North Korea has nuclear weapons as opposed to the fact that they do not have the governance to use them.
Availability
Relying on more readily available information
Escalation of Committment
You can think of that powerplant that kept funding there project despite constant and non stop opposition from the rest of community.
Fundamental Attribution Error
Relying too much on your internal judgement or hard work and too little on the external circumstances of life.
Over Confidence
Having too much belief in your ability to do something, despite not having all the reasons too. Think of it as self enhancement bias.
Individual Decisions Pros
- Faster
- Clear
- Direct Accountability
Individual Decisions Cons
- Fewer Ideas
- Possible Procrastination
Group Decisions Pros
- Fun
- Greater Ideas
- Greater Comittment
Group Decision Cons
- Time
- Social Loafing
- Group Think
Technique for Group Decision Making
- Nominal Group Technique
- Majority Ruling
- Consensus
Nominal Group Technique
This is a technique in which all members write ideas individually and then go around the whole group and discuss the ideas and there relevance.
We did this at Lazy-Faire
Majority Ruling
You see this in politics, the person who gets the most votes or the idea that gets the most votes will be the one that the group selects
Consensus
You see this on the Jury for Murder trials, unless there is a unanimous decision, then no decision will be made at all. It is either we all say yes or well all say no form of decision making.
Decision Rules
The automated responses used to make programmed decisions
