Decision Making Flashcards
Decisions
a means to achieve some result or to solve
some problem. The outcome of a process that is influenced by many forces.
Opportunities and Threats
Opportunities and threats both in the internal and external environment, impact decision making
Decision making in response to opportunities
occurs when managers search for ways to improve organizational performance to benefit customers, employees, and other stakeholders
Decision making in response to threats
occurs when events inside or outside an organization adversely affect organizational performance and
managers search for ways to increase performance without making costly mistakes
Two types of decisions
Programmed and Nonprogrammed
Programmed Decisions
- Programmed decisions are situations in which
specific procedures have been developed for
repetitive and routine problems. - typically handled through rules, standard operating procedures, and the structure of the organization.
Nonprogrammed Decisions
- Nonprogrammed decisions are decisions
required for unique and complex management
problems - typically handed through a general problem-solving process, judgement, intuition, and creativity.
7 steps of decision making
- Establish goas and measure results
- Identify and analyze the problem(s)
- Develop alternative solutions
- Evaluate alternatives
- Select the best solution
- Implement the decision
- Follow up and evaluate the decision
Decision Making Process:
Establish Goals and Measure Results
Goals are long-term achievements or outcomes that a department or organization wants to accomplish
Decision Making Process: Identify and Analyze the Problem(s)
That magnitude of a problem is measured by the gap between the level of performance specified in an organization’s goals and objectives and the level of performance attained
Several factors that make it difficult to identify a problem
- Individual feelings or perceptions of a problem.
- Defining problems in terms of solutions and jumping to conclusions.
- Failure to identify the cause of a problem.
Determining problem significance involves consideration of three issues:
urgency, impact, and growth tendency
What is a critical part of effective decision making?
determining problem significance
Decision Making Process:
Develop Alternative Solutions
Before a decision is made, feasible alternatives should be developed, and potential consequences of the alternatives should be considered
How are alternative solutions discovered?
through a search process that involves investigating
internal and external environments to gain information that can be developed into possible alternative solutions
What’s one obstacle to problem solving?
the ability for managers to identify alternative solutions, as some managers are either too single minded or too close to the problem to view it with a fresh
perspective.
Decision Making Process: Evaluate Alternative Solutions
Alternatives must be evaluated and compared once they are identified.
Managers use four criteria to evaluate alternative solutions:
- Legality
- Ethics
- Feasibility
- Practicality
The alternative-outcome relationships is based on three conditions”
- Certainty – The decision maker has complete knowledge of the probability of the outcome of each alternative.
- Uncertainty – The decision maker has absolutely no knowledge of the probability of the outcome of each alternative.
- Risk – The decision maker has some probable estimate of the outcomes of each alternative.
When managers are evaluating alternative solutions, two cautions should be kept in mind:
- The phase of the decision making process must be kept separate and distinct from the previous step, identifying solutions.
- Be wary of solutions that are evaluated as being “perfect.”
Devil’s Advocate
an appointed critic of proposed group actions whose role is to uncover underlying issues with the prevailing direction of the group.
Decision Making Process: Select the Best Solution
The purpose of selecting the best solution is to solve a problem to achieve a predetermined objective.
- A decision is not an end in itself, but a means to an end.
- Decision making is a dynamic process, not just an act of choosing
Why are optimal solutions often impossible in managerial decision making?
because managers cannot possibly know all of the available alternatives, the consequences of each alternative, and probability of occurrence of these consequences.
Decision Making Process: Implement the Decision
A decision must be effectively implemented to achieve the objective for which it was made.
- Implementation is more important than the choice of alternative since a “good decision” can
be negated by poor implementation.
- Managers need to choose good solutions, and communicate effectively throughout the
decision making process with possibly affected stakeholders.
